BoG governor unveils proposed relaxing of capital controls

BoG governor unveils proposed relaxing of capital controls

Bank of Greece Governor Yannis Stournaras on Monday laid out a series of measures that Athens has proposed to the country’s creditors to relax capital controls introduced last summer.

Under Greece’s proposal, the capital controls will not apply to cash that is transferred from bank deposit boxes or people’s homes to their bank accounts.

The restrictions will also cease to apply when it comes to the repayment of bank loans. Further, as regards sums transferred into the country, depositors will have access to up to a third of the amount, compared to a tenth now.

An additional measure that Greece has proposed to its creditors is to allow savers to withdraw up to 840 euros in one go every two weeks. Currently, savers can withdraw a maximum of 420 euros every week.

Athens is also proposing to accelerate the process of approving bank transfers abroad by increasing the maximum amount of transfers approved by each bank’s committee to 350,000 euros from 250,000 euros per customer per day.

The aim is to have businesses served within a day of their application for a bank transfer.

The proposals all have to be examined by Greece’s creditors, which are waiting for Athens to take action on labor regulations and nonperforming loans, among other reforms.

Apart from dealing with the creditors, the government also faces challenges at the domestic level.

As time is pressing for negotiations to start with the creditors over the second review of the country’s bailout, the government is determined to focus the public debate on three main objectives: introducing electoral reform, pushing through changes to the country’s media broadcasting landscape and a review of the Constitution.

Critics have accused the Tsipras administration of trying to divert attention away from the tough negotiations that lie ahead with the lenders, while sources say it wants these institutional changes to be its legacy.

With regard to the new electoral law, the government is still struggling to muster the 200 votes needed in Parliament to pass it into law.

However, aides to the prime minister say there is still hope that some opposition parties – namely PASOK and To Potami – will not heed the call by New Democracy to reject the government’s proposal.

Even though both have said they will not vote for the changes, the government’s narrative is that as small parties they have every reason to back its proposal to replace the existing enhanced proportional system – which entails a 50-seat bonus for the winning party – with a simple proportional system.

To this end, aides say the government is mulling a few tweaks to its proposal to get both parties on board.
“We are open to discuss proposals,” a government source said.

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