ith Greece having gone past the point of no return, things are now escalating very rapidly, and moments ago the BBC's Nikc Sutton tweeted that the BBC's Mark Mardell was told the Greek government will be "looking overnight at imposing capital controls and closing banks on Monday."
The context, of course, is bluffing until the very end, with Varoufakis claiming that if the ECB were to stop support for Greek banks, then Europe as we know it (or not) "has failed."
.@yanisvaroufakis "monetary union that cannot guarantee functioning banks…constitutes a major denial of the v principle of a monetary union"— Nick Sutton (@suttonnick) June 28, 2015
The problem is that Greece would be, in the eyes of the ECB, no longer part of the monetary union and certainly won't be after June 30 if there is no "deal" so as Dijsellbloem said yesterday, it is the Greek government's problem - in other words, Europe thinks it has won the "blame game", and the loser is Greece while Greece is still desperate to make Europe seem the villain.
The whole BBC interview can be heard here:
And of course, in keeping with the diplomatic strategy of Greece, which has been to promptly deny everything it has just said, Varoufakis did just htat.
Capital controls within a monetary union are a contradiction in terms. The Greek government opposes the very concept.— Yanis Varoufakis (@yanisvaroufakis) June 28, 2015
Reuters adds that on Sunday night the Greek government will consider imposing capital controls and closing the country's banks on Monday, Finance Minister Yanis Varoufakis said, while asserting the crisis did not mean Athens would have to leave the euro.
Varoufakis, asked if capital controls were now inevitable and if the banking system would be shut down on Monday, told BBC radio on Sunday: "This is a matter that we'll have to work overnight on with the appropriate authorities, both here in Greece and in Frankfurt."
Varoufakis said he would be holding talks with the Bank of Greece and the European Central Bank to see "what can be done to minimise the burden on our people from Europe's refusal to grant us basic democratic rights".
He said the crisis and a planned referendum did not mean Greece would necessarily have to leave the euro however, even if Greeks voted to reject the package being offered by creditors.
"It doesn't have to and it shouldn't," he said. "There are no provisions for leaving the euro once in. You can't get out. This is part of the European treaties. Why should we have to consider even getting out of the euro?"
But admit or deny, it no longer matters: moments ago the ECB announced it has frozen the Greek ELA at its Friday level even as the Greek bank run has claimed at least another €1 billion in deposits according to Skai TV reports (ahead of its formal pulling just after midnight on Tuesday when Greece is no longer in an official bailout program), and as such it is only a matter of time before the entire ELA bailout is unwound a la Cyprus in March 2013. From the ECB:
ELA to Greek banks maintained at its current level
- ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme
- ECB will work closely with Bank of Greece to maintain financial stability
- Emergency liquidity assistance maintained at Friday’s (26 June 2015) level
- Governing Council stands ready to review decision
- Governing Council closely monitoring situation and potential implications for monetary policy stance
The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.
Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.
Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).
The Governing Council stands ready to reconsider its decision.
Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.”
Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”
The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.
End result (h/t @NectarAxais):