Capital controls strain bank activity

Capital controls strain bank activity

Banks across Greece may have reopened their doors after a forced holiday of over three weeks on Monday but almost all banking transactions are still prohibited for households and enterprises, and will stay that way for some time yet.

The problems in the real economy are too many to list since the imposition of capital controls erected insurmountable barriers to most transactions. Citizens cannot withdraw more than 60 euros per day and will have a limit of 300 euros by Friday if they do not make any cash withdrawals over the course of the. From Saturday it will be back to a maximum 60 euros, which will roll over to the following day, unless withdrawn, up to the following Friday, July 31 – and every Friday thereafter – when bank customers will be able to withdraw a maximum of 420 euros if they have not withdrawn any money in the preceding seven days.

What’s more, depositors cannot send any money abroad unless they secure special permission, they cannot buy stocks or bonds, they cannot pay off their mortgage or consumer loans early, they cannot access their time deposits before they mature, or open a new account, etc. Even seeking medical treatment at a hospital abroad requires the approval of a bureaucrat.

Similarly, enterprises have to apply to the Banking Transaction Approval Committee even for the smallest conceivable international transaction. Whether they wish to import goods (from food to fabric), raw materials, machinery or spare parts, they have to submit an application through their bank to a five-member special committee and hope for the best.

The backlog of such demands currently stands at 2,500 at least as the process is extremely slow and priority is being given to low-value transactions because of the lack of liquidity.

Banking officials tell Kathimerini that it is vital for the government to quickly clinch a final agreement with country’s creditors that will prompt the European Central Bank to unlock more cash for local lenders so they can process the international transactions of enterprises. Failing that, many businesses will have no choice but to lay off staff and possibly shut down, given also the economic recession and the uncertainty of the last six months, according to banking sources.

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