Greek crisis: Banks shut for a week as capital controls imposed - as it happened (2024)

It’s 2am in Greece now, and round midnight in the UK. So that might be a good time to wrap up, so we can tackle another huge day on Monday.

Here’s our front-page story about today’s drama:

Read it all here:

Thank you, as ever, for reading and commenting. It’s been a wild weekend. See you shortly. GW

All over Athens people have been queuing tonight, but the lines outside the National Bank branches were by some distance the longest, reports Jon Henley.

And that’s because the National Bank supplies the banknotes, and lots of other Greek banks, by midnight on Sunday, had no more of those.

“People are feeling very concerned … very insecure,” said Maria Poulimeniou, outside the National Bank on Eleftherios Venizelos street in Kallithea, a southern Athens suburb.

“The situation changes from one minute to the next. First they say the banks will be closed on Monday, now for the whole week.”

Pouleminou, who works in the finance department of a shipping company, said she had tried the local branch of her bank, Alpha, but “they had nothing left. Empty. So I’m here. I’m taking out the limit – €600, it is here. But they say after midnight it will be €60. That’s why there’s a queue.”

While Greece’s government announced on Sunday night that the country’s banks would not open on Monday, that capital controls would be introduced and limits set on withdrawals, there was no official confirmation yet of what those limits would be. But there were at least 70 people queuing outside this one branch, and most National Bank branches on the way back into town had similar lines.

As their debt-laden, all but insolvent country – and the eurozone – entered uncharted territory last night, it seemed plenty of Greeks were taking no chances.“I’m not taking out all I have,” said Stathis, 58, who described himself as a private sector employee.

“But the government has just said the banks will stay shut for a week, so I’m here to take out what I need for that – maybe a couple of hundred euros.” He was quite clear about who he though was responsible.

“We should never even have tried to negotiate,” he said.

“Whatever the government did, I think we would probably have ended up exactly where we are right now. This whole thing has been planned, from the start, by the Germans.”

Yannis, a postgraduate finance student, was more phlegmatic. “I just want to withdraw what I can now,” he said. “It’s far from clear to me when we will be able to take money out again. I’m aiming for €300 – enough for at least a week, I hope.”

But he said he had “no idea” what would happen after that.

“(Prime minister Alexis) Tsipras says he’ll be able to go back to Brussels in a better position after this referendum, and reopen negotiations with the institutions from a position of strength...But nobody knows if that will be the case. Nobody knows anything, in fact.”

Anna, 63, a pensioner, wanted to make clear she was not standing in a bank queue just before midnight because she had panicked. “Look,” she said.

“I had no cash, and I obviously need some. My pension has just been paid, and I’m here with my neighbout to take some of it out. Not all of it – just some. That’s all. I’m not scared, not in the least. We’ve seen worse, here. We will come through this.”

The Big, Big question isn’t whether shareholders lose money.

It is whether investors are still confident that debt issued by Italy, Spain, Portugal, et al is safe.

Three years ago, Mario Draghi calmed the crisis by vowing to do ‘whatever it takes’ to save the euro. We are about to find out if people believe him.

Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd, has told Bloomberg that we’re entering a “very very volatile” time.

“The knee-jerk reaction is for flight out of the euro and into safety. Defaulting to the IMF tomorrow looks like a certainty and when that happens there is no proposal, there is no legal mandate for Europe to bail out Greece.

There are a whole bunch of unknown unknowns.”

Analysts at RBC Capital Markets confirm that traders will be racing for safety on Monday, and watching Greece very, very closely.

Here’s their early take:

In the early hours of Saturday, the PM announced plans for a referendum. Events have accelerated since then. The euro is trading significantly weaker at the Asia open (spot 1.0970) and risk aversion seems likely to dominate the day ahead

As the week progresses, if polls point to a Yes vote and more clarity emerges regarding what happens after the programme expires on Tuesday, that initial market reaction may soften. The day ahead is quiet for scheduled data leaving focus squarely on Greece.

Remember, when stock market traders switched off their machines on Friday night, there was broad confidence that Saturday’s eurogroup meeting might bring a Greek deal closer.

Instead, Alexis Tsipras announced his shock referendum plan as Europeans headed to bed - leaving investors watching the crisis unfold, but unable to reach. Until now.

Oh Goodness Me.

Global stock markets are just getting into gear for the new week, and it’s already clear that shares are going to fall sharply on Monday morning.

The future’s market is predicting that the main US stock markets could fall by close to 2%.

European indices are also going to be hit very hard, judging by IG’s futures market:

Our economics editor, Larry Elliott, has written about how Greece’s crisis could be even more serious than some people recognise.

He’s dubbing it a “Sarajevo moment” for the eurozone - whose full consequences aren’t quite apparent yet, but which are truly seismic.

Here’s a flavour:

A fully fledged monetary union has the means to transfer resources from one region to another. This is what happens in the US or the UK, for example, with higher taxes in areas that are doing well being redistributed to areas with slower growth and higher unemployment.

The euro, however, was constructed along different lines. Countries were allowed to join even though it was clear they would struggle to compete with the better performing nations such as Germany. A stability and growth pact designed to ensure a common set of budget controls was a poor substitute for fiscal union. From the start, it was obvious that the only mechanism for a country that ran into severe difficulties would be harsh austerity. Greece is the result of what happens when politics is allowed to override economics.

If Greece leaves, the idea that the euro is irrevocable is broken. Any government that runs into difficulties in the future will have the Greek option of devaluation as an alternative to endless austerity. Just as importantly, the financial markets will know that, and will pile pressure on countries that look vulnerable. That’s why Greece represents an existential crisis for the eurozone.

It will be said in response that Greece is a small, insignificant country and that the single currency has much better defences than it had at the last moment of acute trouble in the summer of 2012. Diplomats in Europe’s capitals took very much the same view in late June 1914.

The euro is continuing to be pummelled in early trading in Asia -- it has now shed almost two cents against the US dollar.

Sky’s economics editor Ed Conway sums it up:

Alastair Winter, chief economist at City firm Daniel Stewart, fears Greece is now certain to leave the eurozone.

He believes that Greece’s creditors have been angling to trigger the formation of a government of national unity, which would accept the measures they proposed. But even if that happened, other European parliaments might not back such a deal (the Bundestag could be particularly unreceptive).

Winter adds that other eurozone governments could come under threat too:

In the meantime, the Greek government is likely to run out of money to pay pensions and public sector salaries: it has already stopped paying suppliers, many of which are going bust, and businesses and individual taxpayers are withholding their dues.

In other words, Grexit is inevitable even if the timing and mechanics are far from clear and it appears that the EuroGroup et al are decreasingly uncomfortable with that outcome. How long, however, before the domino theories of other exits start to circulate?

Here’s the moment that Greece officially entered the era of capital controls tonight, as Alexis Tsipras addressed the nation.

Helpfully there are English subtitles too.

Macedonia, the Balkan state to the north of Greece, has instructed its banks to take action to protect themselves from the Greek crisis.

The central bank of Macedonia has told commercial banks to “withdraw all deposits and loans from banks situated in Greece and their branches around the world.” It also asked them to take “preventative measures” to limit the flow of capital to Greece.

It said the move was ‘temporary”, and designed to protect the Macedonian system from disruption.

More here on Reuters.