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Greek debt crisis: Banks to remain shut all week Greece debt crisis: Banks to remain shut all week
(about 1 hour later)
The Greek government has confirmed that banks will be closed all week, after a decision by the European Central Bank not to extend emergency funding. Greek banks are closed and will stay shut for the week as the country's debt crisis took a dramatic turn.
In a decree, it cited the "extremely urgent" need to protect the financial system due to the lack of liquidity. Greeks are struggling to find cash, but cash machines were due to reopen at noon local time (10:00 GMT).
Cash withdrawals will be limited to €60 (£42; $66) a day for this period, the decree says. Greece decided on Sunday to shut banks and restrict cash withdrawals after the European Central Bank resolved not to extend emergency funding.
Athens is due to make a €1.6bn payment to the IMF on Tuesday - the same day that its current bailout expires. It followed the failure on Friday of talks with Greek creditors on continuing with the bailout programme.
In reaction to the crisis, the London, Paris and Frankfurt stock markets fell sharply in early trading on Monday, following similar falls in Asia.
The euro lost 2% of its value against the the US dollar. Government borrowing costs in Italy and Spain, two of the eurozone's weaker economies, have also risen.
Greece crisis - live coverageGreece crisis - live coverage
Talks between Greece and the eurozone countries over bailout terms ended without an agreement on Saturday, and Prime Minister Alexis Tsipras then called a surprise referendum on the issue to be held on 5 July. A critical deadline looms on Tuesday, when Greece is due to pay back €1.6bn to the International Monetary Fund - the same day the bailout expires. Default is feared and possible exit from euro.
Greece risks default and moving closer to a possible exit from the 19-member eurozone. The French cabinet met in emergency session. President Francois Hollande said afterwards that a deal was still possible if the Greeks wanted it.
"There are a few hours before the negotiation is definitively closed, in particular for the prolongation of the Greek aid programme."
In its decree bringing in the bank restrictions, the Greek government cited the "extremely urgent" need to protect the financial system due to the lack of liquidity.
The main points are:
Queues formed briefly in Athens on Monday morning, a BBC reporter says, but dispersed quickly in anticipation of the cash machines opening in the afternoon.
The crisis came to a head on Saturday after Greece and eurozone countries failed to reach agreement on payment of the last tranche of bailout money.
PM Alexis Trispras then called a surprise referendum for 5 July on the latest terms offered by Greece's creditors.
In reaction to the crisis, the London, Paris, Frankfurt and Milan stock markets fell sharply in early trading on Monday, following similar falls in Asia.
The euro lost 2% of its value against the the US dollar. Government borrowing costs in Italy and Spain, two of the eurozone's weaker economies, have also risen.
'Not viable''Not viable'
The decree was published in the official government gazette after the Greek cabinet took the decision late on Sunday. The Athens stock exchange is also closed as part of the measures.
The document said the measures - including the shutting down of the Athens stock exchange on Monday - were agreed as a result of the eurozone's decision "to refuse the extension of the loan agreement with Greece". The decree says they were taken as a result of the eurozone's decision "to refuse the extension of the loan agreement with Greece".
The €60 restriction on withdrawals will not apply to holders of foreign bank cards.
Mr Tsipras also said that Greek deposits were safe.
Greeks have been queuing to withdraw money from cash machines over the weekend, leaving a number of ATMs dry.
However, the decree said that the cash machines would "operate normally again by Monday noon at the latest".
Days of turmoilDays of turmoil
Eurozone finance ministers blamed Greece for breaking off the talks, and the European Commission took the unusual step on Sunday of publishing proposals by European creditors that it said were on the table at the time.Eurozone finance ministers blamed Greece for breaking off the talks, and the European Commission took the unusual step on Sunday of publishing proposals by European creditors that it said were on the table at the time.
But Greece described creditors' terms as "not viable", and asked for an extension of its current deal until after the vote was completed.But Greece described creditors' terms as "not viable", and asked for an extension of its current deal until after the vote was completed.
"[Rejection] of the Greek government's request for a short extension of the programme was an unprecedented act by European standards, questioning the right of a sovereign people to decide," Mr Tsipras on Sunday said in a televised address."[Rejection] of the Greek government's request for a short extension of the programme was an unprecedented act by European standards, questioning the right of a sovereign people to decide," Mr Tsipras on Sunday said in a televised address.
He also said he had sent a new request for an extension to the bailout. "I am awaiting their immediate response to a fundamental request of democracy," he added.
Analysis: Robert Peston, BBC economics editorAnalysis: Robert Peston, BBC economics editor
The temporary closure of banks in Greece, and the introduction of capital controls, is very bad news for Greece. Greek people will have less money to spend and business less to invest; so an already weak economy will probably return to deep recession.The temporary closure of banks in Greece, and the introduction of capital controls, is very bad news for Greece. Greek people will have less money to spend and business less to invest; so an already weak economy will probably return to deep recession.
As for the impact on the rest of the eurozone, corporate treasurers and wealthy individuals will wake up on Monday wondering if their money is safe in the banks of other weaker eurozone economies.As for the impact on the rest of the eurozone, corporate treasurers and wealthy individuals will wake up on Monday wondering if their money is safe in the banks of other weaker eurozone economies.
Greece's bank holiday from hellGreece's bank holiday from hell
The current ceiling for the ECB's emergency funding - Emergency Liquidity Assistance (ELA) - is €89bn (£63bn). It is thought that virtually all that money has been disbursed.The current ceiling for the ECB's emergency funding - Emergency Liquidity Assistance (ELA) - is €89bn (£63bn). It is thought that virtually all that money has been disbursed.
The ECB was prepared to risk restricting ELA because the failure of the bailout talks cast new doubt on the viability of Greek banks - some of their assets depend on the government being able to meet its financial commitments, the BBC economics correspondent Andrew Walker reports.The ECB was prepared to risk restricting ELA because the failure of the bailout talks cast new doubt on the viability of Greek banks - some of their assets depend on the government being able to meet its financial commitments, the BBC economics correspondent Andrew Walker reports.
He adds that it is a fundamental principle of central banking that while you do lend to banks that are in temporary difficulty, you do so only if they are solvent.He adds that it is a fundamental principle of central banking that while you do lend to banks that are in temporary difficulty, you do so only if they are solvent.
Are you in Greece? Are you affected by the issues in this story? What are your hopes and fears for the economy? You can share your experiences by emailing haveyoursay@bbc.co.uk.Are you in Greece? Are you affected by the issues in this story? What are your hopes and fears for the economy? You can share your experiences by emailing haveyoursay@bbc.co.uk.
Please leave a contact number if you are willing to speak with a BBC journalist.Please leave a contact number if you are willing to speak with a BBC journalist.
You can contact us on WhatsApp +44 (0)7525 900971You can contact us on WhatsApp +44 (0)7525 900971