The Greek government’s decision comes after the European Central Bank announced on Sunday it will not pump more money into the depleted coffers of the country’s banks. Over the past few weeks, Greeks have been scrambling to withdraw money from ATMs amid fears the nation’s banks will soon run out of cash.
The Greek government announced on Monday that banks across the country will stay closed all week as capital controls are put in place after the European Central Bank refused to increase emergency funding to Greek banks on Sunday.
The news comes as Greece inches towards financial calamity after Athens and its European lenders failed to find common ground over the terms of a second financial bailout during protracted talks in Brussels over the past week.
Under capital controls, the amount of money people will be able to withdraw from ATMs will be restricted to 60 euros ($66). However, Prime Minister Alexis Tsipras said Greek bank accounts and pension funds are still secure.
Long lines were seen at many ATMs on Sunday as Greeks scrambled to withdraw whatever funds they could from their bank accounts before they closed.
On Monday, it was announced visitors and people with credit cards issued from abroad are exempt from the restrictions. Tourism accounts for at least a fifth of the country’s economy, and Greece did not want to see it negatively impacted.
The day before, tourists had been seen anxiously waiting in the long ATM lines for money because they did not yet know the specifics of the restrictions.
Greece is scheduled to repay $1.7 billion to the International Monetary Fund (IMF) by Tuesday. Officials said defaulting on that repayment could trigger Greece’s exit from the euro.
In spite of the looming deadline, the EU, led by Germany and the wealthier northern European countries, has refused to lend any more money to the Greek government unless it undertakes further austerity measures, such as welfare and pension cuts. Read more…