Greeks woke up to
shuttered banks, closed cash machines and a climate of rumors and
conspiracy theories on Monday as a breakdown in talks between Athens and
its creditors plunged the country deep into crisis.
After
receiving no extra emergency funding for Greek lenders from the
European Central Bank, Prime Minister Alexis Tsipras sombrely announced
capital controls in a televised address on 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 exit from the euro currency bloc.
But after Tsipras angered Greece's international lenders by announcing a snap referendum next Sunday on the terms of a cash-for-reforms deal, hopes of a last-minute breakthrough are fading fast. Greeks reacted with a mixture of disbelief and fear.
"I can't believe it," said Athens resident Evgenia Gekou, 50, on her way to work. "I keep thinking we will wake up tomorrow and everything will be OK. I'm trying hard not to worry."
European
officials sent confusing signals about their next move. A spokesman for
the European Commission told French radio that Brussels would not make
any new proposals on Monday, appearing to contradict comments by EU
Economics Commissioner Pierre Moscovici. He said a new offer was
forthcoming and that the two sides were "only a few centimeters" away
from a deal.
European bank shares fell sharply on Monday. Top banks in Spain, France and Germany were down more than 6 percent as the risk of a spillover to banks in other peripheral euro zone countries spooked investors.
The Greek 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 on Monday -- will be limited to 60 euros a day when they reopen on Tuesday. The stock exchange will also stay shut.
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.
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 exit from the euro currency bloc.
But after Tsipras angered Greece's international lenders by announcing a snap referendum next Sunday on the terms of a cash-for-reforms deal, hopes of a last-minute breakthrough are fading fast. Greeks reacted with a mixture of disbelief and fear.
"I can't believe it," said Athens resident Evgenia Gekou, 50, on her way to work. "I keep thinking we will wake up tomorrow and everything will be OK. I'm trying hard not to worry."
European
officials sent confusing signals about their next move. A spokesman for
the European Commission told French radio that Brussels would not make
any new proposals on Monday, appearing to contradict comments by EU
Economics Commissioner Pierre Moscovici. He said a new offer was
forthcoming and that the two sides were "only a few centimeters" away
from a deal.European bank shares fell sharply on Monday. Top banks in Spain, France and Germany were down more than 6 percent as the risk of a spillover to banks in other peripheral euro zone countries spooked investors.
The Greek 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 on Monday -- will be limited to 60 euros a day when they reopen on Tuesday. The stock exchange will also stay shut.
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.
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