One-year anniversary of capital controls in Greece

Greece marked the dour one-year anniversary of the imposition of capital controls this week, with the “multi-billion-euro” question being when state-mandated restrictions on bank deposit movements in Greece-based banks will be lifted.

A cascade of predictions, forecasts and lukewarm promises were trotted out over the past year, especially by ministers of the leftist Greek government and banking executives, yet the restrictions remain, even in the wake of a conclusion of the first review of the Greek program last month and the subsequent restoration of a waiver by the ECB to allow Greek banks to use state bonds in their possession as collateral for borrowing from the central bank.

At stake is the full normalization of Greece’s battered and twice recapitalized banking system.

Banking officials have cited the need for an absolute implementation of provisions agreed to with creditors in the third memorandum along with the numerous prior actions linked to the latter, many of which came even after a Eurogroup meeting on May 24 approved, in principle, the first review of the third bailout.

As the summer tourist season heats up, the emphasis is on achieving a gradual loosening of capital controls, although no fixed timetable has been unveiled.

One initiative that fell victim to “Brexit” was the possibility of excluding “new cash” entering bank vaults from restrictions.

(By A. Doga, naftemporiki)