Greece Easing Capital Controls to Strengthen Confidence

The government is gearing up to launch new measures that are billed as easing  capital controls but which will in fact reduce the annual amount of cash bank clients can withdraw.

As of September 1, when the new measures come into force, citizens will be able to withdraw a total of €1,800 ($2,119) per month. When the controls were first introduced in July 2015, Greeks could only withdraw €60 a day, 365 days a year, but since then they have been allowed to carry that amount forward up to a period of two weeks, giving them a €840 limit every 14 days (fixed, from midnight Friday to midnight two weeks later). That will remain the case until the end of August, Ekathimerini.com reported.

The extension of the cumulative withdrawal period may facilitate transactions, but on an annual basis the total amount a bank customer can withdraw will fall from €21,840 (€840 x 26 two-week periods) to 21,600 (€1,800 x 12 months).

Greeks could in fact withdraw more money per year on the original limit of €60 per day, totaling €21,900 a year, as that avoided the fixed-two-week-period problem. In other words the “easing” of restrictions has resulted in curtailing people’s withdrawal limit by €300 per annum, for the right to transfer a withdrawal to another day or week.

Bank sources told Kathimerini it is a positive move that will strengthen confidence, make transactions easier and boost the economy.

The new measures will also affect withdrawals in foreign currency in Greece and the use of Greek debit cards for withdrawals abroad.

As of September 1 any recipients of money forwarded from abroad will be able to withdraw 50% of the amount without any restrictions.

Companies will also be able to open an account at a credit institution by creating a new customer ID regardless of whether they already have another account there. Farmers, who have not been allowed to open bank accounts since the controls started, will finally be allowed to (provided they do not have one already).

Meanwhile, Greece’s stock market has rallied nearly 30% so far this year and more than 50% over the past 12 months.

The Athens Stock Exchange General Index is near the highest levels in two years, though it remains about 85% below the peak in November 2007, when the global financial crisis caused Greece to start missing bond payments. The index plummeted from that point until it bottomed in June 2012, about two years after the International Monetary Fund and the European Union provided Greece with a bailout.