Banks and ATM machines were shut throughout Greece today, the first day of capital controls announced by the government in a dramatic twist in the country’s five-year financial saga.
Despite the closures, pensioners lined up just after dawn at bank branches hoping they would be able to receive their pensions, which were due to be paid today. The finance ministry said the manner in which pensions would be disbursed would be announced later in the afternoon.
The bank closures came after Greeks rushed to ATMs over the weekend to withdraw money following Prime Minister Alexis Tsipras’ surprise call for a referendum on creditor proposals for the reforms Greece should take to gain access to blocked bailout funds.
The referendum has been set for yesterday, and the government has been advocating Greeks vote against the proposals.
The capital controls are meant to staunch the flow of money out of Greek banks and spur the country’s creditors to offer concessions before Greece’s international bailout program expires tomorrow.
Once that happens, Greece loses access to the remaining 7.2 billion euros ($8.1 billion) of rescue loans, and is unlikely to be able to meet a 1.6 billion-euro debt repayment to the International Monetary Fund due the same day.
The accelerating crisis has thrown into question Greece’s financial future and continued membership in the 19-nation shared euro currency and even the European Union.
Asian stock markets sank with indexes in Tokyo, Hong Kong and Sydney down more than 2 per cent. Oil prices and the euro also fell. The Athens Stock Exchange remained closed.
The European Union’s executive Commission, which enforces the bloc’s laws, said the imposition of capital controls was “prima facie, justified.”
Jonathan Hill, the Commission’s top official responsible for financial stability, added that the free movement of capital should be restored as quickly as possible and that the Commission would monitor the way any restrictions are imposed.
Overnight, massive queues formed at gas stations, with worried motorists seeking to fill up their tanks and pay with credit cards while they were still being accepted.
The government announced bank transaction restrictions late yesterday night, limiting daily withdrawals to 60 euros ($67) per person per ATM card. Automatic teller machines were expected to reopen later today, while banks would remain closed for at least six days.
Although credit and cash card transactions have not been restricted, in practice most retailers were not accepting card transactions today morning.
Many of Greece’s retirees don’t have bank cards and collect their pensions directly from the bank tellers. Long lines of elderly Greeks formed at nearby bank branches, despite them being told the banks would not open for the day.
Deputy Minister of State Terence Quick said special arrangements would be made for pensions.