13 June 2012

Reuters: Eurozone discussed capital controls if Greece exits euro

European finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing eurozone capital controls as a worst-case scenario should Athens decide to leave the euro.

EU officials emphasised that the discussions were merely about being prepared for any eventuality rather than planning for something they expect to happen. But with increased political uncertainty in Greece following the inconclusive election on May 6 and ahead of a second election on June 17, there is now an increased need to have contingencies in place, the EU sources said.

No decisions have been taken on the calls, but members of the Eurogroup Working Group, which consists of eurozone deputy finance ministers and heads of treasury departments, have discussed the options in some detail, the sources said.

Belgium's finance minister, Steve Vanackere, said at the end of May that it was a function of each eurozone state to be prepared for problems. These discussions have been in that vein, with the specific aim of limiting a bank run or capital flight.

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.

"Contingency planning is underway for a scenario under which Greece leaves", one of the sources, who has been involved in the conference calls, said. "Limited cash withdrawals from ATMs and limited movement of capital have been considered and analysed."

Full article

© Reuters