Banks will remain closed today Monday, for at least six working days, capital controls until referendum

The Council of Systemic Stability convened under Finance Minister Yanis Varoufakis until late on Sunday evening and has recommended that the banks remain closed.
Although there has not been an official statement as to how long the banks will remain closed, sources suggest that the bank holiday will extend for at least six working days, namely after the scheduled referendum.
Furthermore rumors have been circulating that capital controls will also be introduced introduced, in an effort to curb the outflow of deposits. Among others, the controls would include a daily withdrawal limit of 60 euros, while other limits on interbank and cross-border capital transfers would be imposed. Since the announcement of the referendum Greeks have been queuing up at ATM machines, amid fears of an imminent default.
Banking sources have commented that the imposition of capital controls, which came as a result of the European Central Bank's decision to not increase liquidity towards Greek banks, will be a major blow on the economy, with consumer and business confidence expected to plummet.
Banks to remain closed until July 6 and capital control imposed amid fears Greece may default on its debt and exit euro.

Greek Prime Minister Alexis Tsipras has announced a temporary closure of banks, after the European Central Bank (ECB) said it would not increase additional emergency funding to the counry.

In a television address on Sunday, Tsipras said that the government will also start imposing capital controls ahead of a looming deadline on Tuesday.

The country needs to make a $1.8bn payment to the International Monetary Fund by Tuesday or risk defaulting on its obligations.

The emergency measures were agreed at a cabinet meeting after a gathering of Greece's systemic stability council, called after Eurogroup eurozone finance ministers refused to extend its bailout beyond Tuesday.

Greek government officials have confirmed that banks will remain closed until July 6 - a day after the planned referendum on bailout deal offered by international creditors.

However, officials said that ATMs will reopen on Monday afternoon, with daily withdrawal limit set at 60 euros ($66).

The leftist government in a statement also clarified that tourists staying in Greece and anyone with a credit card issued in a foreign country will not be affected by measures to limit bank withdrawals.

Reuters news agency is also reporting that the Greek stock exchange will also be kept closed on Monday.

In a statement released earlier on Sunday, the ECB said: "Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday."

However, the ECB said it was working with the Bank of Greece to maintain financial stability in the country and that "the Governing Council stands ready to reconsider its decision" not to increase the amount of emergency funding.

Japan stocks plunged more than two percent on Monday, with investor sentiment hit by fears of a Greek default. The Nikkei went down more than 500 points at one point during early trading.

The latest development came as the Greek parliament decided to back Tsipras' call for a referendum on the country's bailout deal with international creditors.

The referendum planned for Sunday July 5 was approved by at least 179 deputies out of a total of 300 politicians.

The creditors have not sought our approval but have asked for us to abandon our dignity. We must refuse.

Alexis Tsipras, Greek prime minister

Tsipras' leftist Syriza party and allied politicians voted in favour of the referendum that has angered its creditors who earlier rejected the debt-ridden country's request for a bailout extension.

In a speech prior to the vote, Tsipras said he was confident that "the Greek people will say an emphatic no to the ultimatum" by the country's creditors - the International Monetary Fund, ECB and European Commission.

"The day of truth is coming for the creditors, the time when they will see that Greece will not surrender, that Greece is not a game that has ended," he said in an address to parliament laced with references to democracy and national dignity.

Grexit 'almost inevitable'

Tsipras also expressed confidence that "in the aftermath of this proud 'no', the negotiating power of the country [with the country's creditors] will be strengthened".

The move comes after five months of stalemated negotiations, with Tsipras accusing creditors of trying to strong-arm his country into taking harsh austerity measures he says would hammer an economy already on its knees after five months of creditor-demanded spending cuts and tax hikes.

Expert: Referendum plan a good idea

"The creditors have not sought our approval but have asked for us to abandon our dignity. We must refuse," Tsipras said during a nearly 13-hour parliamentary session that cumulated in a vote just before 3am on Sunday.

Austria's finance minister said on Sunday that Greece's exit from the eurozone "appears almost inevitable", after EU leaders refused to extend Athens's desperately needed bailout after the call for the referendum .

Also on Sunday, European Council President Donald Tusk said that Greece must remain part of the euro single currency area, adding that he was in touch with government leaders to prevent Athens dropping out of the monetary union.

Anthimos Thomopoulos, the boss of Piraeus Bank, said that the banks would not open on Monday after leaving a meeting of the Greek financial stability council.

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

Greek banks will not open until July 7 in an attempt to avoid financial panic, after ECB capped the emergency funds keeping them running

He made his remarks amid speculation that public holidays looked inevitable in Greece this week after the European Central Bank declined to increase its emergency financial lifeline to the Greek banks, cash that is keeping the country’s financial system functioning.

With Greece holding a controversial referendum on its creditors’ terms for its bailout in less than a week and the eurozone deciding to terminate the bailout on Tuesday, the pressure was on Mario Draghi, the president of the ECB, to make the call as to whether Greece would sink or swim.

In a finely calibrated decision, the governing council of the ECB decided on Sunday to leave the so-called emergency liquidity assistance to Greece at €89bn (£63bn), unchanged from last Friday.

“We continue to work closely with the Bank of Greece,” said Draghi.

Yannis Stournaras, the governor of the Bank of Greece and a member of the ECB council, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”

The decision to maintain life support supplied a little oxygen to a Greece in the throes of suffocation. On the other hand, no fresh funds were made available while Greeks resorted in ever-increasing numbers to withdraw their savings from ATMs, meaning that bank reserves were running low and not being replenished.

It was one of the the most momentous decisions in the ECB’s brief history and came after the Greek parliament upped the stakes when it voted 178 to 120 in favour of holding the referendum proposed by the prime minister, Alexis Tsipras, on Friday. Embarrassingly for his radical left-led coalition, the neo-Nazi Golden Dawn party joined it in endorsing the proposal, which has to be approved by Greece’s president, Prokopsis Pavlopoulos.

As his debt-laden country edged ever closer to exit from the eurozone, queues formed at ATMs in many parts of Athens. Lines of cars waited at petrol stations and supermarkets reported a higher than usual volume of sales as Greeks bought in stocks to see them through a possible crisis. Yet in the centre and more fashionable areas, there was a slightly unreal air of normality.

That was not the only paradox in the fast-evolving crisis. If the head of state gives his blessing to a referendum next Sunday, Greeks may be called to vote on a proposal from Greece’s creditors that will no longer be on offer.

The latest proposal from the ECB, the International Monetary Fund (IMF) and the European commission was based on Greece’s bailout programme, which is due to expire on Tuesday. But on Saturday the so-called Eurogroup of eurozone finance ministers turned down Tsipras’s request for a one-month extension so the referendum could be held without external pressures.

According to two polls published on Sunday, the prime minister faces an uphill battle to secure the rejection he has indicated that he favours. One in the right-leaning tabloid Proto Thema found 57% of those interviewed favoured acceptance of the creditors’ latest offer. Another in the centre-left To Vima put support at 47%.

Syriza’s MPs voted in a bloc for the referendum, together with their coalition partners from the radical right Anel party. They were joined by 16 of Golden Dawn’s 17 lawmakers. One Syriza MP and a Golden Dawn member were absent from the vote, which was taken in the early hours of Sunday.

Austria’s finance minister, Hans Jörg Schelling, intensified the drama, telling the daily Die Presse that Greece would have to leave the EU before leaving the eurozone. He said its departure from the single currency “appeared almost inevitable now” but that this would only be possible if Athens first asked to leave the European Union and other countries agreed to its request.

“It’s clear that one country can under no circumstances blackmail the European commission and the euro countries,” the paper quoted Schelling as saying.

Greece heads to a referendum on Sunday that could decide whether its future lies in or out of the eurozone, with its banks closed and capital controls in place after the European Central Bank decided not to further increase the emergency liquidity it supplies to local lenders.
The decision to impose the extended bank holiday was taken during a meeting of Greece’s financial stability council, which included Finance Minister Yanis Varoufakis and Bank of Greece Governor Yannis Stournaras.
The official announcement had not been made at the time of going to press but sources said that ATM withdrawals would be limited to 60 euros per day per account and that banks would remain closed for at least the next six working days, including the day after the referendum on the institutions’ proposals to Greece. Visitors to Greece will be able to withdraw cash up to the limit set by their bank.
The decision to shut down banks and bring in capital controls came less than 24 hours after Parliament voted in favor, by 178 votes to 120, of holding a referendum on Sunday. This, combined with the expiration of Greece’s bailout extension Tuesday, prompted the ECB governing council, which met Sunday, to decide not to raise the Emergency Liquidity Assistance ceiling beyond the level it reached on Friday.
This meant that banks would not have enough liquidity to support the spike in withdrawals prompted by Prime Minister Alexis Tsipras calling a referendum on Friday night. Around 1 billion euros was taken out of accounts on Saturday as Greeks queued at ATMs around the country. There were longer queues Sunday.
Tsipras blamed the country’s creditors for forcing Greece’s hand but said that this would not halt the plan to hold a referendum next Sunday.
“(Rejection) of the Greek government’s request for a short extension of the program was an unprecedented act by European standards, questioning the right of a sovereign people to decide,” Tsipras said in televised address to the nation Sunday.
“This decision led the ECB today to limit the liquidity available to Greek banks and forced the Greek central bank to suggest a bank holiday and restrictions on bank withdrawals.”
Tsipras also said he sent a new request for an extension of Greece’s bailout – which expires on June 30 – to leaders of eurozone countries and the heads of the European Central Bank, the European Commission, the EU parliament and the European Council.
“I am awaiting their immediate response to a fundamentally democratic request,” he said, adding that such a move could prompt the ECB to turn on the liquidity tap again.
“One thing is clear: the refusal of a short extension, and the attempt to nullify a democratic procedure is an act deeply offensive and shameful for the democratic traditions of Europe.”
Tsipras suggested that the lenders’ behavior would make Greeks more determined to vote against the bailout proposal put forward by lenders to the Greek government on Thursday. In his speech in Parliament on Saturday, the Greek prime minister suggested that a “no” vote would allow him to return to negotiations in a stronger position and able to ask for a better deal from the institutions.
Tsipras said bank deposits and wage and pension payments in Greece remained safe and appealed to Greeks to stay calm.
“Any difficulties that may arise must be dealt with with calmness,” said the premier. “The calmer we are, the sooner we will get out of this situation.”
New Democracy leader Antonis Samaras, who clashed with Tsipras in Parliament on Saturday, called on the prime minister to continue negotiations with the country’s lenders this week in the hope of finding a last-minute compromise. Samaras suggested that if Tsipras does not have enough support from his own party, he should create a national unity administration with the participation of opposition parties.
“Our country needs to remain in the heart of Europe and in the euro. Mr Tsipras must continue the negotiations,” Samaras said. “If he can’t do that by himself, he should attempt a big national consensus.”
Developments in Greece also drew the attention of the American government Sunday. US Treasury Secretary Jack Lew urged top European finance ministers and the International Monetary Fund to continue working together toward a “sustainable solution” to reforms in Greece and its recovery within the eurozone.
Lew spoke by phone with several top officials on Saturday, including the finance ministers of Germany and France, and IMF Managing Director Christine Lagarde, according to a readout of the call provided by the Treasury Department on Sunday.
In those calls, he said it was “important for all parties to continue to work to reach a solution, including a discussion of potential debt relief for Greece, in the run up to the July 5th referendum,” according to the readout, referring to a planned vote in Greece.
Lew also underscored the need for Greece to adopt “difficult measures to reach a pragmatic compromise with its creditors,” the Treasury statement said.
The Treasury spokesperson said senior department officials have also been in regulator communication with Greece and that Lew had spoken to Prime Minister Alexis Tsipras “multiple times” over the past two weeks.
The department has urged Greece to work closely with its international partners on planning for a bank holiday and capital controls, the spokesperson said.
President Barack Obama spoke with German Chancellor Angela Merkel on Sunday about the Greek situation.
“The two leaders agreed that it was critically important to make every effort to return to a path that will allow Greece to resume reforms and growth within the eurozone,” a White House statement said.
“The leaders affirmed that their respective economic teams are carefully monitoring the situation and will remain in close touch.”