Greece said it may impose capital controls and keep its banks shut on Monday after creditors refused to extend the country’s bailout and savers queued to withdraw cash, taking Athens’ standoff with the European Union and the International Monetary Fund to a dangerous new level.
Greece’s banks, kept afloat by emergency central bank funding, are on the front line as Athens moves towards defaulting on a 1.6 billion euros payment due to the IMF on Tuesday.
The European Central Bank said it would not raise the level of emergency funding, adding to the pressure on Greece’s banks which have been surviving for the past few weeks on frequent incremental increases to the funding lifeline.
Amid political drama in Greece, where a clear majority wants to remain inside the euro, the next few days present a major challenge to the integrity of a 16-year-old currency bloc.
“This is a matter that we’ll have to work overnight on with the appropriate authorities both here in Greece and in Frankfurt,” Greek Finance Minister Yanis Varoufakis said of bank closures and capital controls. He was speaking to BBC radio.
The finance ministry later issued a statement saying capital controls were not the government’s preference and were not consistent with monetary union.