Capital controls loosened in Greece: New deposits exempt

19 July 2016
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Institutional creditors on Monday evening reportedly gave the “green light” to a request by the finance ministry and the Bank of Greece (BoG) for a relaxation of capital controls in the country.

With approval by the ECB in hand, a signature by the country’s central banker and publication in the government gazette will loosen the regime imposed in late June 2015, at the height of political and economic uncertainty at the time.

The most prominent feature of the upcoming measure is an absolute lifting of restrictions on “new money” entering the domestic banking system, something more-or-less expected for several weeks now, and finally announced on Monday by Greek Finance Minister Euclid Tsakalotos.

The goal, in the initial phase, is to try and lure back some five billion euros in fresh deposits by the end of the year; cash that banking analysts believe is among the “reserves” held in households and safety deposit boxes.

Additionally, reports state that the maximum withdrawal amount from ATMs will rise to 840 euros per week, up from the current 420 euros. Loosened but still imposed capital controls would apply to previous deposits held in Greek banks.

Nevertheless, whereas the Greek economy previously revolved around the “cash is king” axis, capital controls since last June have caused electronic payments through debit and credits cards – as well as web banking – to skyrocket.

There is no restriction on web banking, as long as money flows from one bank account held at a Greek bank to the same bank or to another of the four Greek systemic banks.

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