Greece Reels in Shock as Banks Shut

Local Editor

Greeks woke up to shuttered banks, closed cash machines and a climate of rumors and conspiracy theories Monday as a breakdown in talks between Athens and its creditors pushed the austerity-battered country to the brink.

After receiving no extra emergency funding for Greek lenders from the European Central Bank, Prime Minister Alexis Tsipras reluctantly imposed capital controls Sunday night to prevent banks from collapsing under the weight of mass withdrawals.

Greece has less than 48 hours to pay back 1.6 billion euros [$1.77 billion] of International Monetary Fund loans, and a default would set in train events that could lead to the country's eventual exit from the euro currency bloc.

But after Tsipras angered Greece's international lenders by announcing a snap referendum on the terms of a cash-for-reforms deal, hopes of a last-minute breakthrough are fading fast.

The government will keep banks shut at least until after July 5, the date of the referendum, and withdrawals from automated teller machines - which are shut Monday - will be limited to 60 euros a day when they reopen Tuesday.

After months of wrangling, Greece's exasperated European partners have put the blame for the crisis squarely on Tsipras's shoulders.
The creditors wanted Greece to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.

As Tsipras announced the emergency measures late Sunday, there were long queues outside ATMs and petrol stations as people raced to take out cash before it was too late.

Newspapers splashed pictures of long lines outside cash machines on their front page. The Nafetemporiki daily headlined Monday's edition "Dramatic hours" while the Ta Nea daily simply said: "When will the banks open."

Despite the financial shock, parts of daily life went on as normal, with shops, pharmacies and supermarkets in the city opening and Greeks meeting to discuss their country's fate at cafes and restaurants. Tourists gathered as usual to watch the changing of the presidential guard outside parliament.

A rally to protest against austerity measures and urge voters to say "No" in the referendum on bailout terms is expected later Monday.
Despite the hardening of positions, officials around Europe and the United States made a frantic round of calls and organized meetings to try to salvage the situation.

US President Barack Obama called German Chancellor Angela Merkel, and senior US officials including Treasury Secretary Jack Lew, who spoke to Tsipras, urged Europe and the IMF to come up with a plan to hold the single currency together and keep Greece in the euro zone. The German and French governments announced emergency political meetings.

Source: News Agencies, Edited by website team