Greek PM Announces Capital Control To Prevent Banks’ Failure

Greek PM Announces Capital Control To Prevent Banks' FailureGreece’s Prime Minister (PM), Alexis Tsipras, has solemnly announced capital controls to prevent Greek banks from collapsing under the weight of mass withdrawals.

The PM made the declaration in a televised address on Sunday night, after a breakdown in talks between Athens and its creditors plunged the country deep into crisis.

In another development, European leaders had gathered for an emergency summit in Brussels that could break the deadlock around the debt crisis facing Greece.

The Greek Prime Minister set out new proposals to try and prevent a default on a 1.6 billion Euros ($1.77 billion) International Monetary Fund (IMF) loan.

However, Greeks woke up on Monday to shuttered banks, closed cash machines and a climate of rumours and conspiracy theories, sequel to Tsipras’ pronouncement.

The country has less than 48 hours to pay back IMF loans and a default would set in train events that could lead to the country’s exit from the euro currency alliance.

Greece Debt Crisis: EU Leaders Gather For Critical Summit

greeceEuropean leaders are gathering for an emergency summit in Brussels that could break the deadlock around the debt crisis facing Greece.

On Sunday, the Greek Prime Minister, Alexis Tsipras, set out new proposals to try and prevent a default on a €1.6bn (£1.1bn) International Monetary Fund (IMF) loan.

The proposals, according to an European official, held plenty of promise.

Greece risks crashing out of the single currency and possibly the European Union (EU) if it fails to repay the loan by the end of June

Talks have been in deadlock for five months. The European Commission, the IMF and the European Central Bank (ECB) are not willing to unlock the final €7.2bn tranche of bailout funds until Greece agrees to economic reforms.

The three creditors must agree to the deal offered by Greece, to ensure Monday’s talks have a clear focus.

Further findings revealed that if deposit withdrawals continue at the current pace, Greek banks will soon exhaust eligible assets they can pledge to the Bank of Greece for cash under the Emergency Liquidity Assistance (ELA) scheme.

Before then, the ECB could turn off the ELA drip feed because it is forbidden to allow the Bank of Greece to lend to insolvent banks.