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One year Capital Controls in Greece – Was it worth it?

Remember that Sunday, on June 28th, a year ago? Remember the queues outside ATMs growing in a quick and non-stop pace? It was a day after Prime Minister Alexis Tsipras had announced a Referendum amid suffocating pressure from the European Union, financial dry out by the European Central Bank and a climate of scaremongering, fear and insecurity among citizens.

In a dramatic appeal to Greeks, Tsipras urged Greeks to “calm down!” and said

“the EUrogroup’s decision to not extend Program and the ECB decision tp not increase the ELA forced the Bank of Greece to propose capital controls.”

Warning signs that Banks would go on extended bank holiday had been rumored since Friday afternoon and had Greeks rushing to ATMs to withdraw as much money as they could from their deposits. Rumor had it that a specific Greek bank had limited cash withdrawals from ATMs.

When Tsipras announced the Referendum at 1 o’ clock in the morning, some Greeks went to withdraw money even at 3 a.m.

Then Sunday afternoon the official announcement: The Greek Systemic Stability Council had to impose capital controls and close the banks as of Monday, 29th June 2015.

The long queues outside the ATMs continued over night.

Capital controls: Πληροφορίες για όριο αναλήψεων 50-60€ την ημέρα - Κλειστές από αύριο και μέχρι τη Δευτέρα 6/7 οι τράπεζες

Monday found half of Greeks at the ATMs and the other half at petrol stations for full tank and supermarkets grabbing staples like rice, pasta, flour and oil.

Κλειστές τράπεζες: Τα capital control μπλοκάρουν την μισθοδοσία μεγάλων επιχειρήσεων – Όλες οι συνέπειες του παγώματος της αγοράς

Outside a bank branch

greece super markets capital controls

Inside a supermarket.

In the following days and under the extreme financial insecurity, Greeks were exposed to an unbelievable campaign to Vote YES in the Referendum and accept Juncker’s bailout austerity. The EC President even addressed Greeks saying he unbelievable phrase “Tsipras lied to you, vote YES.”

Greece referendum

Especially,German officials were hidden inside the ATMS to scare the hell of Greeks and have them vote YES! —- OK, that’s a caricature 🙂

On 5. July 2015, the Referendum took place with 61.31% of Greek to have voted NO and rejected the bailout conditions, an austerity measures plan tabled by the EC and the Eurogroup but clearly written by the German Finance Ministry that gave the tune and every other European followed.

The Referendum result was simply ignored by the Prime Minister. He continued bailout negotiations with the EU and the Eurogroup.

Neither the European Commission nor the European Parliament President nor the 6 founding members of EU came out to urge Tsipras to “respect the will of the people” as they did with the Brexit Vote.

That’s bitter. And dishonest. “Democratic” double-standards. But that’s the EU’s development in the last couple of years.

A year after, on June 28th 2016, capital controls remain in position and thus with the same daily withdrawal cap as on June 29th 2015. Sixty euro per day or 420 per week. Some restrictions have been relaxed.

In the meantime, the government signed a new, the third bailout agreement for 86 billion euro and brought additional austerity measures.

It was the price for remain in the euro zone.

“Was it worth it?” somebody asked me on Twitter. I answered: ” if you had enough deposit in the bank and you have been able to withdraw 365 days x 60 euro = €21,900 in a year without having to see your 21,900 euro violently converted into a devalued Drachmas … it was.

My point was and remains for the time being that

the momentum for Greece to leave the eurozone area was in before May 2010, before the first Memorandum of Understanding, Loan Agreement and Austerity.

I doubt that the damage of the capital controls to real economy has been recorded yet. Or better say: attempts to records are not trustworthy.

Several big company owners have made it into tradition to blame the capital controls for their bankruptcy, but we all know that they were in trouble long before the capital controls due to mismanagement and loans that they could not service while the banks have been demanding repayments.

The banks were rescued with the capital controls and the EU’s bailout money. But confidence to banks and the system has been destroyed. And this confidence hasn’t been restored yet. The shock sits still deep in the Greek soul.

The dramatic June of 2015 here via KTG’s posts

PS some Greeks are relieved to see in today’s EU Summit it’s not Greece high on the European partners bullying agenda but another EU member country – for a change…

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  1. You sued ECB before ECT. What was the result?

  2. As a Euro country, capital controls in Greece worked differently than elsewhere. In a non-Euro country, there are twofold capital controls: (a) domestic and (b) cross-border. Domestic means that you can’t get cash out of the bank. Cross-border means that you can’t buy foreign currency. The population at large typically suffers only from the domestic conrols because they can’t get cash. The cross-border controls affect primarily businesses.

    I don’t think the domestic controls affected Greeks very much because they only apply to cash transactions. I don’t think I ever have 460 Euros per week in cash transactions. And if one needed more cash, one could open new bank accounts. With a foreign bank card, there is no problem at all. My Austrian cash limits are 700 Euros per day and 2.000 Euros per week. I tested that in Greece and it worked the same way.

    Obviously, it is the Greek businesses which suffer from capital controls. Greece might want to split the rules: keep domestic capital controls but ease the cross-border ones.

    • keeptalkinggreece

      you cannot open new bank account under cc

    • Klaus. You are living proof that bankers have a very poor grip on reality, to the point of its being non-existent. It is also clear evidence that we need to deal with banks in a very aggressive and serious way, since they are incapable of providing the services required by society. Let me elaborate for you things that are known to all Greeks and any competent economist:
      (1) CC have effectively destroyed what little remained of the Greek private sector, owing to massive restrictions on imports and exports. In particular, planned new businesses (including one that I was asked to join) have all had to be abandoned — maybe forever.
      (2) The impact on individuals has also been massive. Most elderly people did not have cashcards, owing to lack of modernisation of social attitudes and no interest by the banks or the State in promoting such. Moreover, as pointed out to you, for elderly or handicapped people the need to make frequent trips to cashmachines is arduous and unfair. Add to this problem the fact that machines frequently run out of money, so your trip is wasted…
      (3) Nobody can open a new account, without making a special application which is decided by the Bank of Greece (after delays of months or more). This has been a massive problem for new businesses, indivduals and even transferrred businesses (sold or inherited). One very successful bookshop I know, whose owner died, is at risk of closure because its news owners cannot sort out anything with banks, the tax office, or in fact any institution. Yet they try to keep the business running and pay the salaries of three staff who are entirely dependent on that income.
      (4) Tourists are also affected. There is a daily limit imposed on foreign cards. My own UK cashcard has a very high limit, of about £2,000 per day. In Greece, I can take only 600 euros per day — and even that with high charges imposed (I think) by the Bank of Greece. Of course, this is rather better than 420 euros per week.
      (5) As for not needing cash, in your personal case, this is because you are very wealthy and use credit cards or cashcards. Greeks do not usually have access to credit cards — apart from the crooks connected with Pasok and ND. Besides, there is a large element of hypocrisy here. When I lived in Vienna a few years ago, I was very irritated that my bank (Austria Bank) had machines that refused to dispense notes smaller than 100 euros. I did wonder what Austrians used cash for, if they needed such large notes. It was difficult then, and even more so now, to use 100 euro notes in Greece. Yet this was the smallest I could take from a machine in Vienna! It gives some indication of the disparity between ordinary people in Vienna and Athens.

      • keeptalkinggreece

        ah, trolls…

        • What??!

          • keeptalkinggreece

            he has been trolling since 2010

          • Well, I disagree with Klaus about very many things, but I do think he posts in sincerity. I would not describe him as a troll — just someone with a view taken from an elite position, who genuinely does not know much outside the constrained world of banking. It is useful to see these comments, because we can understand also how political elites fail to deal with reality.

          • He trolls in an awful lot of places I must say then.

      • You would have benefited if you had read what I was saying: yes, the damage was primarily to businesses, which is why I suggested separating the controls.

        I have never seen an ATM (incl. Austria) which dispenses less than 100 Euro notes and mind you, I have some experience with Austria as I live here. I used to work for Bank Austria but never heard of such a limitation.

        Once the initial chaos had died down, I have never talked to any Greek, of all social strata, who complained about only getting about 460 EUR per week. Mind you, this is almost 2.000 EUR per month. Anyone who cannot get by with 2.000 EUR per month in cash does not have my sympathy.

        If Greece permits 600 EUR per day and that is not enough for you (or any tourist), more power to you. And if you get charges, then its because of your card and not because of Greece. Banks are allowed to only charge the fees of the country where the card is issued. Austria doesn’t charge any fees on cash withdrawals. Therefore, I am not charged any fees when I am in Greece. Perhaps you should consider opening an account at Bank Austria. Also, as I mentioned, I had no trouble withdrawing 700 EUR in one day to test the system.

        The real problem which I have encountered is that Greeks don’t have the cash they need to have and not that they can’t access it.

        PS: I have come across the term ‘troll’ many times but I never figured out what it means. Can someone enlighten me? Given the quality of this blog, I presume it means something in the complimentary way.

        • keeptalkinggreece

          the weekly withdrawal limit is still 420 EUR and not 460.
          PS troll is somebody in a comfort zone who always claims to know better

        • Klaus: your arrogance is beyond belief. I read what you wrote, and saw that you paid no attention to ordinary people, and underestimated the consequences for business. The fact that you are incapable of being corrected indicates that you are well and truly assimilated into the mentality and mistakes of the ruling elites. I explained to you above, apparently to no avail, that there is a difference between 420 euros a week and 1,680 euros at once. This differential access to one’s money is primarily related to frequent trips to a cash machine, or queuing in a bank if you do not have a cashcard. Think about it: this affects elderly and handicapped people. Of course, I do not expect bankers or politicians to give a **** about disadvantaged people.

          As for Austria, my account was in Bank Austria, and I lived in the centre of Vienna near my branch. I can assure you that the machine delivered nothing smaller than 100 euro notes. I closed the account years later because the charges were far too high, and the service not good. I have found Piraeus Bank to be a far better bank — at least, for non-commercial customers.

          • keeptalkinggreece

            Come on, he spent his entire life working at a bank, you can’t expect a different mentality now

          • Let me add: started as a dishwasher while in college, moved on to running a student grill, and worked 60-80 hrs. per week during close to 40 years of banking. In between, opened a copy shop franchise after losing a job and delivered boxes to customers for 3 years. Working close to 100 hrs. per week during those years. My ‘comfort zone’ is no more than the comfort zone of anyone else who has done that for 40 years.

          • keeptalkinggreece

            don’t misunderstand the issue: nobody blames you for all the misery of this world

          • Giaourti Giaourtaki

            Some years ago delivering boxes in some European cities brought in 10.000 a month, in some it’s still cool.

      • capital controls has helped domestically Greece in the sense that tax collection is up due to increased debit/credit card usage.

        Imports are harder due to bureaucracy, but Greeks are used to bureaucracy.

        The main issue with CC is of course the fact that it is very difficult to open bank accounts, creating a major issue for new businesses and people who are just starting a bank account, 18 year olds etc.

        The main cause for the fall in GDP is not capital controls, but a lack of confidence in the economy due to SYRIZA being in power.

        • The collapsed GDP is caused by Troika deflationary policies imposed on Greece since the first memorandum, and in the last year by capital controls. You can stop posting right wing propaganda, and try to deal with economic realities.

      • Guys I use about 100 EUR in cash a month, sometimes less!
        Seriously enough with the cash withdrawal bs. Who needs cash in the modern economy? Every shop should have card machines, makes life easier and prevents cheating.
        So lets hope SYRIZA introduces a good law for the first time in their lives, and force all stores to have card machines.


        • When the cc were introduced, cashcards and credit cards were rare in Greece. This is not BS: it is fact. I am sorry that you are not familiar with Greece: perhaps you should stop commenting on it until you learn more. The same advice can be offered to Herr Kastner, who seems to think that his putatively superior knowledge and intellect are of great benefit to all of us.

        • Giaourti Giaourtaki

          I always forget the fucking numbers or the card in the money-machine, you bullshit, also lots of people forget their glasses and so can’t read this bullshit, it’s like the time and the goals bullshit in a soccer-game on the screen, most people can’t read this bullshit unless they buy a stupid expensive new big screen.

  3. Was it worth it ? Well, it saved the Banks – for a while. They are still insolvent and no amount of EU rubbish will make any difference. Once Capital Controls are imposed it is devilishly difficult to remove them. They will be around a long time yet.

  4. You cannot begin to believe how relieved I am that capital controls in Greece have not unduly inconvenienced you or put a dent in your credit card, foreign bank account, and internet-fueled lifestyle. I was truly worried that you might actually have to suffer but it was a huge weight off my shoulder to learn that you do not need €460 a month in cash to make it (€420 for the rest of us mere mortals).

    However not everyone has it as lucky as you.

    Take for instance my mother, an 85years old woman with failing eyesight who is experiencing more and more difficulty getting around on her own. Over the years her world has slowly shrunk and by now is limited to the couple of streets around her house she can get. Every day she slowly hobbles to the grocery store to buy food to get bye. She lives on the small half-pension she gets from my deceased father. She doesn’t complain. She likes being independent and doesn’t want to be a burden on anyone. She doesn’t have a credit card or a foreign bank account and the Internet is a little bit of a mystery to her. Sometimes her neighbor has her over and she speaks to me on Skype – she thinks it’s wonderful but she certainly doesn’t want to try it herself. She’s an educated woman so she understands that the world had moved on. She just wonders why it’s discarded her as irrelevant.

    Every month she has the same problem. How does she get the money out of her bank account so that she can pay the various things she has to pay daily? The nearest bank is far away. In the past she used to walk there and withdraw her pension with all the risks that entailed (how many old people have been robbed?), but it was getting harder and harder for her. It’s far. She’s tired and can’t walk very far any more. It’s also hot out there (try to step out of your temperature controlled penthouse and see what it feels like) and when you get there you have to wait, and wait, and wait… Luckily a childhood friend, someone I trust implicitly, had offered to withdraw her money every month and bring it to her. That worked well. But since the imposition of capital control, he cannot go to the bank every day for her to collect her money. So she has to drag herself there when he cannot. Damn! If only she had a bank account in Austria with a credit card and an internet connection! Life would be so much sweeter!

    And what happens when something goes wrong in her house? Luckily she has me and I’m happy to transfer the money she needs into her account? But how can you amass the amount needed when you can only withdraw €420/week and you also need money to live on? Again, she’s lucky to have me. I speak Greek and I am able to negotiate with the various people she needs to deal with to pay them through wire transfers and foreign credit cards. Otherwise she’s be living with a hole in her ceiling and no heat.

    However, and purely as an academic exercise, try to come out of your cozy Frappuccino and technology rich cocoon, and try to see life like the majority of the herd has to live it before pontificating about your lifestyle choices to us. Especially since you’re a guest in our country.

    • keeptalkinggreece

      greetings to your mom

      • Thanks.

        The more I think about the more I come to realize that comments such as the one posted by our banker friend Klaus are a clear indicator of what is wrong with the world today.

        Completely cloistered from the real world and its problems, our new neoliberal overlords and their cronies jet around the world in first-class flying from one five-star hotel to another expecting (nay, demanding) all the amenities that they feel must be part of their heightened status: foreign bank accounts, gold cards, generous benefits, golden parachutes, and more (who can forget Lagarde’s demand that she stay in luxury hotels with pools since she cannot afford to miss her daily work outs). All the while, they lament the fact that the rest of the undeserving louts refuse to understand that they must make do with what has been decided is good enough for them. Ungrateful bastards! Churlish knaves! How will we (e.g. the overlords) be able to digest our poached veal and strawberries (the menu from the latest EU leaders meeting) in peace if you (e.g. the herd) keep complaining. Just get on it with it already! Show some backbone! If veal and strawberries are good enough for me, surely stale bread and water are plenty for you!

        • keeptalkinggreece

          so you mean, we spoil their veal? PS “our”? overlords? I don’t think so…

        • Yep. Spot-on. And when one tries to open their eyes, even speaking in a reasonably polite academic tone, the response is that “there must be something wrong with you.” Part of the problem is that many of these people are well-educated, and some are even highly intelligent. Yet they are determined to deny reality, and stick with delusions that benefit them personally and damage others.

    • I look after the affairs of an elderly friend (British) who lives in Greece. He is older than your mum and now housebound. There has to be enough funds to pay the day to day bills and the part time staff (Greeks) who look after him. I have to say it is all a complete nightmare.

    • Why would anyone need so much cash? Of all the bills we have to pay in Greece, I believe the water bill is the only one which has to be paid in cash. Everything else via bank account. Unless, of course, I would want to pay someone ‘in black’ but I am sure you don’t want to see that encouraged.

      I do recognize that the older generation might prefer to handle their bills in cash at the bank counter. Well, that’s their choice and not their duty. I will say this, though: I am always surprised when I see in Greece how comfortly older Greeks deal with modern technology like cash/credit cards, smart phones, etc.

      • keeptalkinggreece

        also water can be paid per bank account and even natural gas (which was difficult in the beginning). sure older Greeks over 80 are very comfortable with cards, ipads, selfies etc… they do it the whole day

        • Old people…what a pain! They can’t know how to use a bank card. They get confused with their PIN numbers. They don’t know how to work an ATM. Why don’t they just die already. If they decide they want to continue to live, it’s their choice and they should face the consequences of their choices. We certainly don’t have any duty towards them.

          Moreover, if they die, there are lots of advantages: fewer pensions to pay, less of a wait at the hospitals, no more annoying delays on public transportation has they shuffle on and off. And best of all, no more memories of what our German friends and their Austrians allies did to Europe twice last century.

        • All I can say: through my wife, I know quite a few of her relatives aged 80+. Some of them belong to the disadvantaged and handicapped whom Xenos refers to. I always listen to their complaints because I am interested. Not one has ever mentioned the 420 EUR weekly limitation. I am not saying that all elderly are comfortable with cards and smart phones but from what have observed so far, certainly a lot more than here in Austria. As regards knowing better, I hate to say this but as regards banking, I think I know more about it than anyone commenting here.

          • keeptalkinggreece

            60EUR x 7 days = 420 EUR
            sure you look into things form behind the banking sector counter, but there is also the other side.

          • I am afraid most of you have a very limited view of what bankers do. You look at Goldman, Deutsche, HSBC and all those global players (incl. hedge funds) and think that that’s what banking is. True, those dominate the world in a way that is also unacceptable to me.

            But bear in mind: while those bankers (one might even refer to them as parasites) represent the bulk of power in the world-wide banking industry, they only represent a fraction of all the people who work in banking.

            Take Greece. Even though the 4 large banks may have been – or haven been – involved also in crooked deals, the vast majority of their employees, from managers downwards, are responsible people of good character who try to do the best for their customers. If you don’t believe me, go to your nearest branch and observe the customer service people.

            Even countries like Germany or Austria are full of bank locations where the employees and the managers have only one priority: to optimally service customers. Because they are such wonderful people? No! Because that’s what their job description requires them to do and they are appraised according to their job description.

            I, for example, have been in both worlds, the world of the parasites and the world of the customer service mentality. For the parasites, the customer is just a tool to make profits. For the others, the customers is the end in and by itself, otherwise they wouldn’t have customers.

            Those who blame the parasites don’t have to criticize me. I am one of them. Those who discredit all bankers simply don’t know that ‘normal’ banking is all about, need to inform themselves a bit.

          • keeptalkinggreece

            as you were not a bank owner I suppose “bank employees follow and apply owners’ policies” – I’ve spoken many times with bank employees.
            BTW find a doctor or a banker admitting he did wrong.

          • The guys working at my bank (including the director) are just working stiffs like you (maybe) and me. I don’t blame them for anything. However I’m also aware that they don’t make bank policy or determine their bank’s corporate strategy. They just work within that framework and would probably get fired if they deviated from it. Given that, I find it particularly hypocritical for banking bigwigs to hide behind the humanity and common decency of their employee to justify an overall corporate strategy (in which the common banking employee had zero input) that more often then not is simply interested in maximizing corporate profits regardless of the social cost. Parenthetically, the banking stiffs at my mother’s bank always apologize to her for the ordeals she has to endure to get her money. They don’t make snotty comments like “I don’t know why you would need €420 in cash” or “I don’t understand why you don’t use a credit card.” That seems to be the exclusive domain of pompous ex-banking executives from Northern Europe.

          • I know a banker. He’s quite nice. Therefore, from that example I can deduce not only that all bankers must be nice people but because they’re nice I can also conclude that what they do professionally must also be great. That’s kind of in line of your “I know relatives of my wife who are 80+ and don’t have cash or technology problems” argument. Great! So happy for them. But as far as I know they also have servants to wipe their arses and foreign bank accounts to draw on. So am I swayed? Not so much…And as far as crowing about knowing more than anyone here about banking, I’d have you ponder this. All of the really smart bankers who knew so much about the banking system didn’t seem to have seen the 2008 banking crisis coming like a freight train. In fact, there’s quite a bit of evidence that it was in fact caused by their irresponsible manipulations. So I’m really sorry if I’m not very impressed with your credentials and your (and their) advice on how to deal with the financial crisis.

          • keeptalkinggreece

            they are bankers, not prophets, although…

          • Giaourti Giaourtaki

            In 2008 1/3 had no access to internet, most of them kuz they didn’t wanted it, had no time or no money for, given today’s situations…

          • It’s not prophecy to understand the likely results of your own behaviour. I knew bankers in London in the early 1990s who described with great pride how their merchant banks were hiring mathematicians and computer guys to create complex financial instruments that would allow the banks to make lots of money doing nothing. I asked them what these algorithms for the financial instruments were about, what their implications were. The answer: “nobody knows or cares, all we are interested in is making money.”
            So, good at making/stealing money, maybe. But intelligent management of the world’s resources? Nope. Just greed.

          • The former is called anecdotal evidence, and is usually treated with great caution by social scientists. It is very clear from living here (on and off) since 1995 that paying with plastic cards — even in Kolonaki supermarkets — until very recently used to draw attention. Within the last year or so, many people have been obliged to ask for plastic cards in order to access their money. My comments would not apply in stinking rich areas, filled with crooks associated with political parties. They had credit cards even in the 1980s — usually gold ones.
            As for banking, I am absolutely certain that your experience and ability in preserving bank profits are beyond reproach. These ablitities are quite distinct from the running of banks for national economic progress, in providing services to society, or managing almost-empty accounts held by the poor and disadvantaged.

          • keeptalkinggreece

            to tell you the truth, guys, it is clear that the bankers want us to use credit/debit cards as they make a profit out of it. Greeks were forced to get debit cards to be able to bypass the 460euro limit.

          • Virtual money is a lot easier to handle than cash or assets. You can play more tricks with it, and conceal bankruptcy more easily. It’s also cheaper than printing notes or minting coins.

          • Giaourti Giaourtaki

            Reminds of this famous “when I was in Greece all street cafés were (over)crowded” but if one explains them that they’d figure first how many tables in Greece exist or that they need a year to see 1/1000 of all tavernas they just can’t stop thinking of where to get the next beers they like to invite you to, as a nobel prize candidate in math.

          • Giaourti Giaourtaki

            Old people don’t complain about money, pl leave them their pride

      • I saw a youngster wearing converse all stars at a bank depositing a 500 EUR bill into his bank account. Says it all really, that many Greeks have a lot of ‘black’ cash!

        • keeptalkinggreece

          O M G! I found a 20 EUR bill hidden in my 3rd grade grammar book

        • Since you could have no knowledge where that 500 euro note came from, and we have no proof that you are not lying, your story is worthless. In fact, less than worthless: it has negative value.

        • Giaourti Giaourtaki

          Why not kick his ass for converse being sweatshop? Because your cell-phone is made in Congo holocaust?

    • why cant she use a debit card to buy things?

      • keeptalkinggreece

        I bet you’d have the answer if you were born in 1930’s and you were 85 now

      • Giaourti Giaourtaki

        May be she remembers the holocausts and hates that 6 million were slaughtered in Africa for the digital bullshit of the 1st world walking dead

  5. That last comment was meant as a reply to the sensitive post from our banker friend Klaus Kastner. Hard to work on an iPad.

  6. Giaourti Giaourtaki

    Although it is just a caricature it would make a great customer friendly screen in an ATM.

  7. And lets not forget, its the syriza voters in this website who caused capital controls in the first place!

    after all, tsipras was voted democratically!