Thursday

23rd May 2019

Dijsselbloem: Greece might need capital controls

  • Greece could be forced to copy Cypriot-style capital controls to prevent bank runs, according to Dijsselbloem (r) (Photo: consilium.europa.eu)

Greece could be forced to resort to Cypriot-style capital controls in a bid to prevent depositors taking their money out of the country, the chairman of the Eurogroup has warned.

Speaking on Tuesday (17 March), Jeroen Dijsselbloem told Dutch broadcaster RTL Nieuws that “the pressure on Greece is growing," adding that “the amount of cash, money – at least this is what I’m told – is declining by the day".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

However, he added, EU politicians have thought through “various scenarios” that "don’t at all have to immediately be exit scenarios".

He pointed to Cyprus, which remained in the eurozone despite becoming the first member of the single currency to impose capital controls.

"The banks were closed a while, and capital controls - cash flows in the country and out of the country - were tied to all manner of conditions," he said.

Cyprus was forced to introduce capital controls in March 2013 in a bid to limit a run on its banks as a €10 billion bailout programme was messily agreed with the EU. Initially, the government set restrictions on bank money transfers and withdrawals, including a daily cash withdrawal limit of €300. Many of the restrictions are still in place.

Iceland also has capital controls in place, nearly seven years after it imposed them during its banking crisis in 2008.

Dijsselbloem, who is also the Dutch finance minister, made his remarks on the eve of local elections in the Netherlands.

The Greek government reacted angrily, with spokesman Gabriel Sakellaridis stating that “it would be useful for everyone for Mr Dijsselbloem to respect his institutional role in the Eurozone.”

"We don’t easily understand the reasons which motivate him to make statements which do not fit with the role with which he has been trusted. Everything else is fantasy. We believe it is unnecessary to remind him that Greece cannot be blackmailed.”

But Dijsselbloem’s remarks will do little to halt the flow of bank deposits out of Greek lenders.

Savers removed €12 billion from Greek bank accounts in January - figures which were likely replicated in February - dropping bank deposits to their lowest level since 2005, on the back of fears that Alexis Tsipras’ Syriza government will be unable to re-negotiate the terms of Greece’s bailout.

Greek banks are now increasingly dependent on emergency funding from the European Central Bank after the Frankfurt-based bank withdrew a waiver that allowed Greek banks to access its cheap loans using government bonds and government-guaranteed assets as collateral.

In total, the ECB is currently providing around €80 billion in support for Greek banks.

Stop 'wasting time', Dijsselbloem tells Greece

Officials representing Greece’s creditors will return to Athens this week, as Tsipras’ left-wing government is told to stop wasting time in talks on the bailout programme.

ECB to tighten noose on Greek government

The European Central Bank is set to make it illegal for Greek lenders to increase their purchases of short-term government bonds in a move that will tighten the funding noose on the Greek government.

Analysis

EU should stop an insane US-Iran war

"If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!", US president Donald Trump tweeted on Monday (20 May).

News in Brief

  1. Poll: Denmark set to double number of liberal MEPs
  2. European brands 'breaking' chemical safety rules
  3. Report: Merkel was lobbied to accept EU top job
  4. May struggling to get Brexit deal passed at fourth vote
  5. German MPs show interest in 'Magnitsky' sanctions
  6. CoE: Rights violations in Hungary 'must be addressed'
  7. EU affairs ministers rubber-stamp new ban on plastics
  8. Private companies campaign to boost turnout in EU poll

Analysis

EU should stop an insane US-Iran war

"If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!", US president Donald Trump tweeted on Monday (20 May).

Magazine

All about the European Parliament elections 2019

EUobserver's new magazine is meant to help readers prepare for the European Parliament elections, no matter their level of knowledge. You can download and read the entire magazine now.

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Join EUobserver

Support quality EU news

Join us