Greece decided to impose capital controls in the early hours of the morning on Monday. Also, Greek banks will be closed for a few days and are scheduled to reopen July 7. As the Cyprus precedent shows, the reopening of banks will largely depend on whether an accord with creditors is in place.
The capital controls will limit what you can and can’t do if you live in Greece or are just visiting. Here are responses to questions you might have.
Will ATMs distribute money?
ATMs were replenished and started distributing money at midday on Monday and should operate normally throughout the bank holiday.
What’s the withdraw Limit?
People can withdraw up to 60 euros a day per card from their Greek bank accounts. There is no limit on withdrawals of money from foreign bank accounts or from foreign banks.
Credit or debit cards OK?
Purchases in stores or online can be made from Greek retailers with bank accounts in Greece using credit/debit cards. There is no limit on these transactions other than the daily limit on the card. Visitors to Greece with foreign credit cards can use them to pay for hotels and other purchases.
What about pre-paid cards?
A pre-paid card can be used provided it was charged before the capital controls decree was issued. A pre-paid card can’t be charged anew nor can a new one be issued.
What about Internet and phone banking?
Money can be transferred through Internet/phone banking provided it’s within the country. There’s no limit on these transactions. Transferring money abroad is banned.
Are foreign transfers possible?
The Committee of Bank Transaction Approval of the country’s General Accounting Office needs to approve all transactions to foreign banks. (for eg: money to be sent to Greek students studying abroad or for health purposes)
What about payment orders?
Payment orders will be executed normally as long as the money is being transferred to a bank account held in Greece.
Paying bills/taxes/loan etc?
These payments can be executed through a web/phone banking service. In the case of non-payment, there will be no interest on deferred payment.
Are Greek controls Like Cyprus’s?
The measures announced by Greece are much stricter than those put in place by Cyprus in March 2013. Withdrawals from ATMs in Cyprus were limited to 300 euros a day, not 60. Payments abroad of up to 5,000 euros were not subject to any restrictive measure. Parents could transfer money for living expenses up to 5,000 euros per quarter, as well as tuition fees, to their children studying abroad. Cypriots traveling abroad could use credit or debit cards to pay for hotels and other expenses, with a limit of 5,000 euros a month. They could also carry up to 1,000 euros in cash with them per person, per journey. Greeks can’t use their cards abroad. Effectively, they can’t travel outside Greece unless they have a bank account overseas.
How long will capital controls last?
There’s no real limit. Cyprus kept controls in place for two years, between 2013 and 2015, even though they were supposed to be a temporary emergency measure. The decree issued on Monday by the Greek government gives the finance minister the right to extend capital controls and amend restrictions at will. Experience from other countries, including Iceland, shows that once in place, they can only be lifted gradually, after a long period of time.
What other impact on Greece?
They would buy time and may avert or delay the collapse of the banking system. They may give Greece breathing space to strike a deal with creditors over the bank holiday period, albeit at a huge cost. The limit on corporate transactions for imports and deposit withdrawals will hurt retail sales, tourism, industry, imports and virtually every other sector of economic activity.
Are capital controls legal?
In very rare cases. While the free movement of capital is one of the “four basic freedoms” of the European Union, restrictions are possible under “strict conditions on grounds of public policy or public security.” Greek capital controls should remain in place for the “shortest possible period,” European Financial-Services Commissioner Jonathan Hill said on June 29.
Did Greece have other options?
Not really. The government could have let the Emergency Liquidity Assistance, which keeps Greek lenders afloat be exhausted, in which case there would be no money left in the Greek financial system after a few days with savers rushing to withdraw as much cash as they can. A complete exhaustion of ELA would push Greece out of the euro area as no economy can function without liquidity and its banks would fail. Even if the government plans to leave the currency bloc, capital controls give it time to print a new currency or a currency equivalent.