[8]
The banks in Greece have been closed [9]for six days in a row now, and Greek citizens were allowed to retire just 60 EUR per day from their bank accounts. Some banks reopened yesterday, but only to allow pensioners to draw 120 EUR from their bank accounts where their retirement benefits were wired to. This had led to dramatical situations:
[8]
Source: AFP
The situation is worsening by the minute, and whereas the National Bank of Greece said last weekend the ‘replenishment of the ATM’s goes smoothly’, there now is a shortage of 20 EUR notes. This is due to the effect most people wanted to withdraw the maximal amount of 60 EUR, and the only possible combination at Greek ATMS (which only contain 20 and 50 EUR notes) is to withdraw 3 banknotes of 20 EUR. This leads to surrealistic situations where shops and supermarkets are unable to give their customers change.
[8]
Source: Slate.com
The tension is increasing, and there’s no way the banks will be open again right after the referendum [10]. The capital control measures will have to be extended because most people would raid their bank accounts the minute the banks reopen again. Exactly BY instating capital controls, a bank run is more likely than ever, as the capital controls imply the cash simply isn’t there anymore. This was confirmed by senior bankers in Greece, which confirmed [11] the ATMS would run out of money by the middle of next week.
[8]
Source: Slate.com
The only possibility to replenish the ATM’s would be to ask the ECB to increase the Emergency Lending Assistance ceiling from 89B EUR towards 100B EUR. That’s theoretically a realistic assumption but this will be subject to a) the Greeks not overwhelmingly voting ‘no’ in the referendum and b) the question if the ECB wants to play hardball over a 22 year old loan.
According to a German newspaper [12], the National Bank of Greece was supposed to repay a final 470M EUR slice of a loan at the end of June. This money was ‘given’ to Greece in 1993 and should have been paid back by now. So after defaulting on the IMF payment, Greece has actually also defaulted on a commitment to the ECB outside of the emergency bailout measures.
So, why would the ECB still be interested in providing more funds under the Emergency Liquidity Assistance program if the country’s central bank has already defaulted on an old loan?
[8]
That’s why the risk of a bail-in has become realistic now. Rumor has it there might be a 30% bail-in [13] on deposits above 8.000 EUR. So if you have 50.000 EUR on your account, you’d wake up one morning to see you only own 37.600 EUR anymore and 12.400 EUR have been robbed from your account. Never mind the 100.000 EUR guarantee extended by the government, never mind one has worked hard his entire life to save some cash. One morning you’ll wake up and a part of it will be gone.
That’s once again a reason why hard assets are an excellent thing to own – as long as you keep it outside the financial system because even people who did buy gold but stored it in a bank’s vault still aren’t able to monetize it now, when they need it the most.
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