Just like in Argentina when they were imploding the Greek banks are seeing a run on deposits as desperate Greek citizens thy to pull out their Euros to buy hard assets or to move them to Switzerland as Swiss francs. And just like in Argentina the Greek government is going to impose capital controls to prevent people from pulling out their money and moving it out of country. Scoundrel governments always resort to this when the country they've mismanaged start to go under. We'll see the same things here in the USA in a few years when an increase in interest rates causes a liquidity crisis here. No wonder they Feds are authorizing domestic drones, instituting high tech domestic survailance, stockpiling ammunition and planning for mass domestic detention facilities.
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"It looks increasingly likely that Greece will have to implement controls to prevent capital flight and a banking collapse. To my mind, the only real question is when this will occur.
The widespread talk about Greece possibly leaving the euro zone is likely to trigger withdrawal of bank deposits and other financial assets, by those who fear they might be redenominated into a drachma that would be worth far less than the euro.
Foreigners have around 46.7 billion in deposits in major financial institutions in Greece. According to the latest data, there were around 1.3 billion of euros belonging to non-Greek euro-zone residents as of March 2012. In addition, there were deposits of 45.4 billion euros belonging to non-euro-zone residents.
Corporations and households of Greece had around 153 billion euros on deposit in Greece as of March 2012. By far the largest portion of that—nearly 140 billion—is owned by Greek households. Forty-nine billion of that is in savings deposits, which could easily be withdrawn. Another 84 billion is in time deposits, many of which may include penalties for early withdrawal.
Much of these deposits will likely flee Greece in the next days and weeks, if controls are not put in place. Even residents concerned about meeting payments due in the new currency—such as tax assessments—would be better off converting into a new currency after a euro-exit than before.
Even controls on expatriating funds may be inadequate. Most ATMs across Europe allow withdrawals of up to 300 euros per day. A paper by London’s Capital Economics Limited calculated that if every working-age Greek withdrew the maximum amount, the Greek financial system would lose 2.3 billion euros per day. At that rate, every single deposit of Greek households would be gone within 61 days. (In reality, the Greek banks would run out of euro notes long before that.)
So the controls put in place in advance of an exit from the euro would have to include not only limits on moving funds abroad, but limiting withdrawals from ATMs and possibly declaring a bank holiday.
Such controls could face challenges under European Union rules. After all, the free flow of goods, people and capital across member borders is one of the core principles of the EU. But it appears as if an early look into the possibilities of controls found that they could be permissible in extreme circumstances."
AI
