Are Greek Capital Controls Now Inevitable?
While the trading algos are blissfully honing their headline-scanning skills (it should take no longer than a few nanoseconds to find whether “patient” and “international” are in the FOMC statement) ahead of tomorrow’s Fed announcement and avoiding any macro developments from around the globe, the biggest international news hit earlier today when Greece came one step closer to if not a Grexit, then a full blown bank run and capital controls when none other than the chair of the Eurogroup Jeroen Dijsselbloem became the first European Union official to suggest the possibility ofcapital controls to prevent Greece leaving the euro, which in turn drew a furious reaction from Athens, which accused him of “blackmail.”
Quoted by Bloomberg, Dijsselbloem said that “It’s been explored what should happen if a country gets into deep trouble — that doesn’t immediately have to be an exit scenario,” he said. For Cyprus, “we had to take radical measures, banks were closed for a while and capital flows within and out of the country were tied to all kinds of conditions, but you can think of all kinds of scenarios.”
In Athens, the insolvent but proud government issued an angry reply: cited by Kathimerini, spokesman Gavriil Sakellaridis said “It would be useful for everyone and for Mr Dijsselbloem to respect his institutional role in the eurozone. We cannot easily understand the reasons that pushed him to make statements that are not fitting to the role he has been entrusted with. Everything else is a fantasy scenario. We find it superfluous to remind him that Greece will not be blackmailed.”
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