Europe Brings Out The "Capital Controls" Bazooka

Tyler Durden's picture


Here we go:


In other words, that money you thought you had... You don't really have it. We can only hope this message was not meant to restore confidence and prevent future bank runs. Because if Europe wanted a continental bank run, it may have just gotten one.

This is getting scary very fast.

Full piece from Reuters:

European finance officials have discussed as a worst-case scenario limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro.

EU officials have told Reuters the ideas are part of a range of contingency plans. They emphasised that the discussions were merely about being prepared for any eventuality rather than planning for something they expect to happen - no one Reuters has spoken to expects Greece to leave the single currency area.

Belgium's finance minister, Steve Vanackere, said at the end of May that it was a basic function of each euro zone member state to be prepared for problems. These discussions appear to be in that vein.

But with increased political uncertainty in Greece following the inconclusive election on May 6 and ahead of a second election on June 17, there is now an increased need to have contingencies in place, the EU sources said.

The discussions have taken place in conference calls over the past six weeks, as concerns have grown that a radical-left coalition, SYRIZA, may win the second election, increasing the risk that Greece could renege on its EU/IMF bailout and therefore move closer to abandoning the currency.

No decisions have been taken on the calls, but members of the Eurogroup Working Group, which consists of euro zone deputy finance ministers and heads of treasury departments, have discussed the options in some detail, the sources said.

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.

"Contingency planning is underway for a scenario under which Greece leaves," one of the sources, who has been involved in the conference calls, said. "Limited cash withdrawals from ATMs and limited movement of capital have been considered and analysed."

Another source confirmed the discussions, including that the suspension of Schengen was among the options raised.

"These are not political discussions, these are discussions among finance experts who need to be prepared for any eventuality," the second source said. "It is sensible planning, that is all, planning for the worst-case scenario."

The first official said it was still being examined whether there was a legal basis for such extreme measures.

"The Bank of Greece is not aware of any such plans," a central bank spokesman in Athens told Reuters when asked about the sources' comments.

The vast majority of Greeks - some surveys have indicated 75 to 80 percent - like the euro and want to retain the currency, something Greek politicians are aware of and which may dissuade them from pushing the country too close to the brink.

However, SYRIZA is expected to win or come a strong second on June 17. Alexis Tsipras, the party's 37-year-old leader, has said he plans to tear up or heavily renegotiate the 130-billion-euro bailout agreed with the EU and IMF. The EU and IMF have said they are not prepared to renegotiate.

If those differences cannot be resolved, the threat of the country leaving or being forced out of the euro will remain, and hence the need for contingencies to be in place.

Switzerland said last month it was considering introducing capital controls if the euro falls apart.

In a conference call on May 21, the Eurogroup Working Group told euro zone member states that they should each have a plan in place if Greece were to leave the currency.

Belgium's Vanackere said two days after that call that it was a basic function of each euro zone member state to be prepared for any eventuality.

"All the contingency plans (for Greece) come back to the same thing: to be responsible as a government is to foresee even what you hope to avoid," he told reporters.

"We must insist on efforts to avoid an exit scenario but that doesn't mean we are not preparing for eventualities.

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Mon, 06/11/2012 - 11:39 | 2514809 ITrustMyGut
ITrustMyGut's picture


this is all purposeful... planned...  how fucking whack is that!

back to the soap business for jooo~

Mon, 06/11/2012 - 11:47 | 2514788 Marco
Marco's picture

This is why the only viable way forward is an European deposit guarantuee ... if we had not squandered so much money on bail outs we would already have close to enough money for it to begin with.

Let the sovereigns and banks default, let the bond holders and investors take the hit ... but protect the depositors, they are far more important to the functioning of the economy.

PS. I don't care about the morality of wealth transfer ... it's not worth the collateral damage to me to let everything burn. I have a job in a trade surplus nation in the EU, but I'm not insane enough to think letting half the Euro zone burn won't hit me here as well. The problem is the bailout of the rich, not the concept of solidarity. Even now we are saving Spanish banks, not Spanish depositors ... we're still doing it wrong.

Mon, 06/11/2012 - 11:55 | 2514900 NooooB
NooooB's picture

Not according to the propaganda machine... According to them it's Banks, Eggs, THEN chickens...

Mon, 06/11/2012 - 11:36 | 2514789 holdbuysell
holdbuysell's picture

Those in the US: take heed and learn. You're going to need it.

Mon, 06/11/2012 - 11:40 | 2514812 Thomas Jefferson
Thomas Jefferson's picture

And consider yourself lucky that we get a front row education by watching Europe implode.

Mon, 06/11/2012 - 11:48 | 2514863 Al Huxley
Al Huxley's picture

Sure, if only anybody was watching.

Mon, 06/11/2012 - 11:53 | 2514886 BalanceOrBust
BalanceOrBust's picture

What happens when people start dumping US bonds? Capital controls? Would the US dare?

I don't understand as it is why anyone wants 1.6% on the US ten year rather than just holding cash. Isn't cash safer and more liquid than bonds?

Mon, 06/11/2012 - 14:21 | 2515496 Cthonic
Cthonic's picture

Depends on what you mean by cash.  If you mean physical cash, there's only a trillion or so in circulation (mostly overseas), whereas M2 is closer to ten trillion... not enough physical bucks to go around.  If you mean electronic cash 'equivalents' like now accounts, money market funds, etc., there are all sorts of arbitrary restrictions now in place that can be invoked in an emergency situation.

Speaking of physical cash, was returning home through a major texas city on an interstate the other weekend and was pulled over for, ah, excessive speed.  Probably the only time I've ever received a warning for this; officer told me flat out that he was only interested in 'interdiction' and in response to my quizzical look further explained 'you know like contraband, people smuggling, large sums of cash'.  At this point I wouldn't say cash is something safe for an individual to be hauling about; if you aren't robbed by a common thug, you might still be relieved of your loot by another under the color of law.

Mon, 06/11/2012 - 15:06 | 2515653 Cathartes Aura
Cathartes Aura's picture

these are the new trrrst laws people might want to investigate, in that police are tasked with confiscating monies & property - all the rage now. . .

Mon, 06/11/2012 - 15:48 | 2515797 kekekekekekeke
kekekekekekeke's picture

tried to pm you

what blogs or books do you recommend reading please re: present state and future amrka

Mon, 06/11/2012 - 12:17 | 2515033 Pairadimes
Pairadimes's picture

They're watching alright, they just don't understand what the hell they're seeing.

Mon, 06/11/2012 - 11:41 | 2514820 maxw3st
maxw3st's picture

US has a real fiscal/monetary structure behind its currency. We're not in the same position as the EZ. We also have increasing, not declining growth. US did not implement policies doomed to failure the way the EZ has.

Mon, 06/11/2012 - 11:58 | 2514841 bdc63
bdc63's picture

dude ... whatever you're smok'in, you need to share ...

Mon, 06/11/2012 - 11:59 | 2514928 DogSlime
DogSlime's picture

Don't share it - you'll end up chewing someone's face off (but you won't swallow).

Mon, 06/11/2012 - 12:32 | 2515095 Cruel Aid
Cruel Aid's picture

Max is kidding-Unfunded Liabilities for starters.

Mon, 06/11/2012 - 12:34 | 2515103 krispkritter
krispkritter's picture

Sounds like a girl I used to date...

Mon, 06/11/2012 - 11:45 | 2514848 j.tennquist
j.tennquist's picture

Two people can have completely different diets and still have a heart attack.   Patient A is vegan.  Patient B eats donuts.  They both suffer from massive heart attacks.  

In a complex world, made more complex by foolish self-serving political stunts, the paths to disaster can be infinite.  Just because we haven't made the exact same mistakes as the EZ is of no comfort at all.  

Mon, 06/11/2012 - 11:49 | 2514870 Al Huxley
Al Huxley's picture

That's fantastic!  From where do you get your news?

Mon, 06/11/2012 - 11:53 | 2514875 Marco
Marco's picture

I'll readily admit, we screwed the pooch in the Euro zone ... the federal fiscal unity, and stuff like federal minimum wage, with it's implicit wealth transfer to pay for the trade imbalances caused by free interstate trade gives the US a stability the Euro zone lacks.

The Euro zone still has something which the US doesn't though, balanced external trade ... the Euro zone economy is competitive but internally imbalanced, the US is "at mercy" of the house of Saud (ignoring the Military side of the equation).

Mon, 06/11/2012 - 11:51 | 2514877 Tirpitz
Tirpitz's picture

Max, I enjoy your humor.


Mon, 06/11/2012 - 17:29 | 2516088 mkkby
mkkby's picture

This is really easy folks.  When treasury rates start spiking and the USD takes a dive -- withdraw your money from banks and get into gold or a recently "saved" currency.  You'll have months and years after this signal.  Just look at the europe slow train wreck. 

Rates are still record low and trending lower.  Chill for now with popcorn and your fav beverage.

Mon, 06/11/2012 - 11:36 | 2514790 j.tennquist
j.tennquist's picture

It was always scary.  Now it's getting real.

Mon, 06/11/2012 - 11:36 | 2514791 Zola
Zola's picture

EU officials have told Reuters the ideas are part of a range of contingency plans. They emphasised that the discussions were merely about being prepared for any eventuality rather than planning for something they expect to happen 

Using the Rosetta stone for EUSS newspeak where the opposite of what is said is true...Sounds like this will get ugly fast...

Mon, 06/11/2012 - 11:46 | 2514851 Mitzibitzi
Mitzibitzi's picture

Almost has to, now. Otherwise they run the risk of Greece's dynamic, young new guv'nor Alex telling them to go fuck themselves if they think they're getting any of that money back; but we're sticking with the Euro, thanks!. Sets an unfortunate precedent, since there'd be sweet Fanny Adams they could actually do to Greece in that case.

Mon, 06/11/2012 - 11:58 | 2514924 stocktivity
stocktivity's picture

I'm sure Benny, Timmy, and the boys are also discussing contingency plans...but they aren't stupid enough (even for their already low standards) to publicize the fact.

Mon, 06/11/2012 - 15:00 | 2515619 Non Passaran
Non Passaran's picture

Hehe, the euro bozos weren't either.

Security thru obsurity was a great plan - until the news leaked out.

Mon, 06/11/2012 - 11:37 | 2514793 Cone of Uncertainty
Cone of Uncertainty's picture


Mon, 06/11/2012 - 11:37 | 2514798 Jlmadyson
Jlmadyson's picture

Been warned for over 5 years now. We still have no idea how bad it really is out there.

Mon, 06/11/2012 - 11:45 | 2514843 goldfish1
goldfish1's picture

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.

Your world just got smaller.

Mon, 06/11/2012 - 11:37 | 2514801 sunny
sunny's picture

DON'T STAND IN FRONT OF ANY EUROPEAN FANS!!  Something strange might be hitting them soonish.


Mon, 06/11/2012 - 11:52 | 2514803 firstdivision
firstdivision's picture


Mon, 06/11/2012 - 11:38 | 2514804 carbonmutant
carbonmutant's picture

Is this the path to Fiscal Unity?

Mon, 06/11/2012 - 11:38 | 2514805 Broomer
Broomer's picture

European finance officials have discussed as a worst-case scenario limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro.

Now seriously, are the Europeans insane?

It's like they want the system to melt down.

Mon, 06/11/2012 - 11:42 | 2514825 ITrustMyGut
ITrustMyGut's picture fact.. they do... yes.

single global electronic currency ... incoming!!!!!!!!!!!!!!!!!!!!

Mon, 06/11/2012 - 11:39 | 2514806 canardo
canardo's picture

Whoa! Reminds me, one of the first things the now defunct Dutch government did in 2010 was to make it illegal for people to call for bank runs. This was after the dsb bank debacle where someone did just that, and it worked, dsb went under. Thought that was pretty scary at the time ...

Mon, 06/11/2012 - 11:39 | 2514808 Mugatu
Mugatu's picture

Problem with Greece - no problem:  Just spray it with windex!

Mon, 06/11/2012 - 11:40 | 2514813 Lost Wages
Lost Wages's picture

Seems like a good day for everyone to go to the atm.

Mon, 06/11/2012 - 14:53 | 2515600 Non Passaran
Non Passaran's picture

Yeah, let's see a Webcam of that Swedish ATM now!

I'd love to be in the employee in charge of the ATM network (or at least its key databases or security cameras) at some major European bank right now :-)

Mon, 06/11/2012 - 11:47 | 2514815 ebworthen
ebworthen's picture

Let's see who in the MSM reports this.

"Attention, your money may be confiscated and any ATM access denied, because the banks need your money as they gambled and pissed away your mortgage payments and deposits and bailouts that you gave them before."

Doubt it, more like:

"Europe imposes Capital controls, which is another way of saying that your money is guranteed."


Mon, 06/11/2012 - 11:40 | 2514817 Dapper Dan
Dapper Dan's picture

Eurozone crisis

  @CNBC tweeted: Fitch ratings cut long-term credit ratings for Spanish banks Banco Santander & Banco Bilbao Vizcaya Argentaria to BBB-plus from A. -Reuters
Mon, 06/11/2012 - 11:42 | 2514818 TomGa
TomGa's picture

I had heard that one country (Greece, Ireland??) had already limited ATM withdrwls to 300 euros / week. Anyone?

Mon, 06/11/2012 - 11:45 | 2514836 ebworthen
ebworthen's picture

An unconfirmed rumor last I heard; or an idea floated that was quickly squelched - but maybe that has changed (this was last Fall).

I wouldn't doubt it happening though.

Story:  last DecemberI cashed out some retirement (under $10K), had a check FROM J.P. Morgan Chase account, and the Chase branch WOULD NOT CASH IT. said they were not allowed to.

How's them apples?

Mon, 06/11/2012 - 11:51 | 2514874 Village Smithy
Village Smithy's picture

Stealth capital controls. They implement a policy with a seemingly small effect but multiplied out over millions of customers it shores up the balance sheet signifigantly.

Mon, 06/11/2012 - 12:03 | 2514957 azzhatter
azzhatter's picture

I ran into same thing. Deposited it and withdrew $500 per day for 3 weeks

Mon, 06/11/2012 - 12:21 | 2515048 Temporalist
Temporalist's picture

Hmm, after surcharges and bankster fees, plus taxes and regulatory compensation, with a quick bit of math...that amounts to $17.54.

Welcome to Zimbabwe.  Got gold?  Uganda need it!


Mon, 06/11/2012 - 11:41 | 2514822 lailapa
lailapa's picture

Global Debt Crisis - The greatest private fraud of human history.

Who are the great fraudsters who are becoming the murderers of the human kind?


The Eastern gates of Europe at risk: How Northern Europe shoots itself in the leg

Germans plunge Europe into a new Medieval Era... Are they ready to take that risk ?

Mon, 06/11/2012 - 11:41 | 2514826 firstdivision
firstdivision's picture

Welcome to modernized 1920's Europe. The new SS=Securities Salesman?

Mon, 06/11/2012 - 11:42 | 2514831 Jason T
Jason T's picture

Rauol Pal... No Bond markets, No Stock Markets .. only dollars and gold.  Bitchez

Mon, 06/11/2012 - 11:43 | 2514833 Bobportlandor
Bobportlandor's picture

So what does this say about storing bullion internationally?


Unless it's under your control you have no control.


Mon, 06/11/2012 - 11:45 | 2514844 Lost Wages
Lost Wages's picture

There is no escape from their tentacles.

Do NOT follow this link or you will be banned from the site!