Greece shuts banks’ doors

ATHENS, Greece – Greece’s five-year financial crisis took its most dramatic turn yet, with the cabinet deciding after an eight-hour session that Greek banks would remain shut for six business days and restrictions would be imposed on cash withdrawals.

The Athens Stock Exchange would also not open today, financial sector officials confirmed.

The moves are meant to stem flow of money out of Greek banks and spur the country’s creditors to offer concessions before a bailout program expires Tuesday. The accelerating crisis has thrown into question Greece’s financial future and continued membership in the 19-nation shared euro currency – and the European Union.

For the past two days, Greeks have rushed to ATMs to withdraw money across the country after Prime Minister Alexis Tsipras’ sudden weekend decision to call a referendum on creditor proposals for Greek reforms in return for bailout funds.

A decree published early today in the official Government Gazette stipulates banks will not open this morning and would remain closed through next Monday. The finance minister could decide to shorten or extend that period.

Withdrawals from ATMs will be capped at 60 euros ($66) daily. The decree said ATMs would be working at the latest 12 hours from its publication, meaning cash machines should have opened by early afternoon.

Web banking transactions would be mostly free, allowing Greeks to pay bills online. However, they cannot move money to accounts abroad.

Credit and bank cards issued abroad can be used at ATMs with no restrictions, benefiting foreign visitors to Greece and its tourist industry. Anxious tourists had joined locals at ATM lines Sunday, thinking the restrictions would also apply to them.

For emergency needs, such as importing medicines or sending remittances abroad, the Greek Treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.

The decision to impose capital controls came after a Bank of Greece recommendation, Tsipras said in a televised address.

Tsipras blamed the Eurogroup, the gathering of the eurozone’s finance ministers, and its decision to reject a request for the bailout program, which expires Tuesday. He again asked for it to be extended by a few days to allow for a referendum.

The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours Sunday, shocked and angered Greece’s European partners. The country’s negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.

Tsipras also blamed the European Central Bank’s Sunday decision not to increase the amount of emergency liquidity the lenders could access from the central bank – meaning Greece has no way to replenish fast diminishing deposits.

In the referendum set for next Sunday, the government is urging Greeks to vote against its creditors’ proposals, arguing they are humiliating and would prolong the country’s financial woes.