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Euro FinMins discussed “Capital Controls”, Eurobank chief warned “Banks might close” on Tuesday, if no deal

So the eurogroup finance ministers allegedly discussed also about imposing Capital Controls in Greece. Custom is that nobody speaks openly about Capital Controls in advance, but suddenly sends banks to “holidays” to the increase the surprise effect and prohibit bank runs. However the Belgian Finance Minister could not keep the secret and broke the gentlemen’s omerta.

capital controls

According to Bloomberg columnist Mark Gilbert, singing bird Johan Van Overtveldt said :

“There were indeed different opinions; not everybody was on the same wave length with respect to capital controls.”

so, in the sense that some were in favor and some not.

 

The times when it was an absolute taboo to talk about bank run, banks collapse, banks shaking and capital controls are long gone. While still in 2013, violation of this taboo could send one directly to prosecutor, nowadays everybody speaks about this with shameful anticipation as if awaiting for Christmas.

On Monday, even one of powerful Greek bankers  talked about it and thus while the important meetings between the Greeks and their creditors were taking place in Brussels.

“Nikolaos Karamouzis, chairman of Greece’s fourth-biggest bank Eurobank, confirmed to BBC that the European Central Bank (ECB) has agreed to keep Greek banks alive today.

But he warned there was a genuine risk of Greek banks being forced to close their doors tomorrow and cease dispensing cash for days, if the Greek government led by Alexis Tsipras fails today to convince eurozone finance ministers and government heads that it is taking credible steps to balance its books.

He said that because of the pace of withdrawals of cash from Greek banks by anxious savers – which he said was running at €700m (£501m) a day – all the banks can only keep going thanks to life-saving loans to them made by the Bank of Greece, with approval of the ECB, under the Emergency Liquidity Assistance (ELA) scheme.

There was a serious risk, he said, that the governing council of the ECB would end ELA, and terminate Greek banks’ full access to the eurosystem payments arrangements, if there was no sign today that Greece is back on a path to solvency.

In that dire eventuality, all the banks would have to cease trading, as soon as tomorrow. And they could only reopen as and when the Greek government passed legislation to restrict cash withdrawals, or introduce capital controls, which – he said – would take days.” (full article BBC)

So now that there is most probably no deal Monday night, Greek banks will close their doors tomorrow Tuesday?

Monday morning, the ECB increased Emergency Liquidity Assistance to the Greek banks at 2 billion euro. The ECB is expected to hold another meeting on Greek ELA later tonight and much will depend on the Euro Leaders Summit results.

ELA is not unlimited and depends on the colateral in form of Greek bonds

Greek media reported that 1.6-1.8 billion euro left Greek banks on Monday, although pre-ordials for deposits withdrawals are at 2 billion euro.

Well… all I can say is Congrats to bankers and finance ministers of the same breed who eat and drink and sit on their warm chairs sponsored by taxpayers’ money and yet do not hesitate to spread fear thus increasing economic instability for the single aim to triple pressure on the Greek government.

PS I am ******* if banks are closed tomorrow. I blew my last 18 euro for pizza, coca cola and cigarettes. Now I have just a 2-euro coin in my purse. But I don’t worry. If capital controls I will be allowed to withdraw 300 euro per day. From any bank account, I suppose, not just from mine 🙂

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8 comments

  1. Affluent Greeks fret as they teeter on the edge.
    “But there has to be a deal. The EU has to save us,” she said, fingering her golden necklace. “Right?”
    “The working class with no money to spend and empty bank accounts . . . has nothing to lose,”
    http://www.ft.com/intl/cms/s/0/d1eaf4d8-17ef-11e5-a130-2e7db721f996.html#axzz3di7qOG4z

    The FT comes clean. The EU/IMF and the greek corrupt oligarchs are in all of this together to smash a government that does not completely bend his knee to the 1% and punish a people for daring to pursue an alternative to misery and humiliation.
    In the meanwhile Tsipras keeps retreating and surrendering instead of clearly preparing and implementing and alternative path…

    • Giaourti Giaourtaki

      No matter what will happen the longer the whole theatre given by Brussels and Berlin will take the more people get known to the real enemy.

      • You can argue the Greek government is just as complicit (if not more) in prolonging the negotiations as much as they could. As the outline of the deal is crystallizing, I do not see the value of the concessions Greece is able to extract being greater than the damage this saga has caused to the Greek economy.

    • ExactIy! They even stage fake raIIies “pro-Europe” to confuse grexit with saving EU, which is nowhere under discussion anyway. Rent-a-crowd with ND printed same banners.

  2. Well if the ECB Is willing to destroy itself…..it should go ahead!

  3. The open discussion of capital controls was to be expected at some point. This is the price the Greek government pays for making credible threats it might default on its external debt and (to quote Varoufakis) taking it “down to the wire” in talks with its creditors.

    Of course, when the banks are focused on not running out of money, they are very unlikely to loan money to citizens and businesses and thus support the economy.

    • Giaourti Giaourtaki

      This “normality” is really funny: The banks don’t have the 100 plus billion of “their” savers, that means they only need capital controls to cover up that they have already stolen away savers money and then there is some “real” money owned by Greek banks that now gets stolen away from Balkan governments.
      And the NATO isn’t taken this as casus belli?:
      http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_22/06/2015_551362