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Capital Controls to stay in Greece until at least the end of 2018

Lifting of capital controls is allegedly not expected to take place before at least the end of 2018. The restrictions were imposed end of June 2015, after the European Central Bank drained Greece’s banks and depositors were massively were withdrawing money out of a fear the country could exit the eurozone.

Citing sources from the credit sector, daily Kathimerini notes that “Greece will spend at least three-and-a-half years under the restrictions of capital controls as their abolition is not expected to come any earlier than the end of 2018.”

After the conclusion of the second review of the Greek program and the disbursement of the 7 billion euro bailout tranche, further steps in terms of easing capital controls are expected, provided that banks have seen some recovery in deposits.

According to the agreement with the creditors, the Bank of Greece and the Finance Ministry have to present a road map for the easing of restrictions. The road map is already being prepared and according to sources it will not contain any dates for the easing of controls but rather will record the conditions necessary for each step to come.

Sources told the Greek daily that the planning provides primarily for helping enterprises by increasing the limit on international transactions concerning product imports or the acquisition of raw materials.

Other Greek media reported that there maybe also an increase of weekly cash withdrawal limit from 420 euro currently to 500 euro. Daily withdrawal limit has been 60 euro since the capital controls were imposed.

Kathimerini understands that the conditions will be the following:

  • the return of deposits
  • the reduction of nonperforming loans
  • the state’s access to money markets
  • the country’s inclusion in the European Central Bank’s quantitative easing (QE) program
  • the settlement of the national debt.

“Ideally, by end-2018 we will be able to speak of an end to the controls. In any case, the restrictions on deposits will be the last to be lifted,” the senior banking source told the daily.

The Hellenic Bank Association is reportedly discussing proposals for further easing. Apart from increasing the monthly limit to 2,000 euro there are also thoughts to increase the withdrawal limit for funds originating from abroad from 30 percent to 60 percent. This ‘new’ money had brought around 5 billion euros to the Greek banks in 2016.

However, the instability about the second review had lead to new mass withdrawals in 2017. “New” money escapes the restrictions of capital controls.

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One comment

  1. Sounds a bit ambitious to me. I don’t know anyone in GR who is talking about depositing money back in the banking system as they are scared if they cannot pay their tax/social security debts, the government will seize the money from their bank accounts.

    So i do not see any money returning to bank accounts in the foreseeable future; on the contrary, everyone i know withdraws as much of their salary as they can the second they receive it = )