Greece eases capital controls to lure cash back into country

1 Aug 16

From today, Greece will ease stringent capital controls in the hope of luring back some of the cash pulled from Greek banks at the height of last year’s crisis.


George Chouliarakis, deputy finance minister, said he expected some €3-4bn in fresh deposits would be attracted once the controls, which were imposed some 13 months ago, were lifted.
The move will be a key test of faith in Greece’s leftist-led government and its economic recovery, and will reveal how confident the Greek people are that their money is safe in the nation’s banks.

From today, new deposits will not be subject to any capital controls whatsoever. Other measures will be eased, including limits on withdrawals of money brought in from abroad. ATM withdrawal limits will be increased to €840 every two weeks, rather than €420 per week.

The measures targeted for relaxation are those that have weighed particularly heavily on individuals and small businesses. Restrictions on a number of other transactions, however, remain in place.

The controls were imposed last summer as bailout talks between Greece and its international creditors fell apart and fears rose that the country would crash out of the single currency.

According to the Greek central bank, about €45bn took flight from the country’s banking system in 2015. Some of that was transferred to foreign accounts, some spent on taxes and other expenses, and some stashed away under mattresses or in safe deposit boxes.

The return of a portion of this cash would represent a much-needed boost to the liquidity and confidence of Greece’s banking sector. 

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