Greece closes banks, imposes capital controls

Cash-strapped Greece – cut off from further infusions of European funds ­– ordered its banks and stock market closed for six days beginning Monday, June 29, as the country’s financial crisis deepens and a Tuesday deadline for easing it fast approaches.

Prime minister Alexis Tsipras went on national television Sunday to announce the moves, hours after the European Central Bank said it will not continue an emergency loan program that had allowed Greek banks to remain open in recent weeks.

Tsipras’ announcement came after weekend talks between Greek negotiators and their European creditors ended without a deal on terms of an ongoing cash-for-reforms bailout. Without a deal, analysts say Athens likely will default Tuesday on a $1.8 billion loan payment due to the International Monetary Fund.

The prime minister blamed European creditors for the crisis that threatens Greece’s membership in the 19-nation euro currency bloc.

On its current timetable, the banks and stock market will remain closed until Greek voters decide in a July 5 referendum whether to accept new austerity measures demanded by the country’s creditors. During the banking shutdown, the reports say customers will be permitted to withdraw a maximum $65 a day and that no cash can be moved abroad unless pre-approved.

In a related development, reports from neighbouring Macedonia say the Skopje government on Sunday ordered its financial institutions to pull their money from Greek banks. Restrictions also were imposed on the outflow of capital to its southern neighbour.

Earlier Sunday, Greek finance minister Yanis Varoufakis hinted that Athens might not make the $1.8 billion payment to the IMF. He noted that the European Central Bank profited on Greek bonds in 2014, and said the bank should simply transfer that money to the IMF to cover the loan payment.

IMF managing director Christine Lagarde voiced disappointment over the stalemate. The White House said president Barack Obama and German chancellor Angela Merkel spoke by phone Sunday and agreed that it is “critically important” that Greece accept European reform demands as a path toward growth within the 19-nation euro currency bloc.

Shortly after the Greek parliament voted Sunday to approve the July 5 referendum, Tsipras told his national audience that “the people must decide free of any blackmail” whether to accept the new austerity reforms. He also said his government is urging a “no” vote unless the terms, said to include new cuts in pensions, are changed.