Effect of Greece's capital controls one year on

Difficult to guage how restrictions on cash movements have affected economy, analysts say

Effect of Greece's capital controls one year on

World Bulletin / News Desk

A year has passed since the imposition of capital controls on Greece that Prime Minister Alexis Tsipras had hoped would end austerity and “bring back dignity to the Greek people”.

Instead, despite recent signs that the restrictions on cash transactions could be eased, the 12 months have seen the country brought to a standstill, witnessed chaos in the banking system and the stock exchange and caused distress to ordinary people forced to queue at ATMs to withdraw a daily maximum of 60 euros ($66).

June 29 last year saw the banks shut for the first time since the 1967-74 junta and the stock exchange remained closed until the referendum a week later offered Greeks a say on the bailout being offered by creditors.

Overwhelmingly, they rejected the creditors’ bailout with a “No” to the proposed austerity measures. However, austerity followed nonetheless.

“Capital controls have been very disruptive since they were imposed a year ago,” political analyst George Kratsas said. “They have primarily affected companies that import goods and services as such companies have not been able to export funds to pay for these goods and services.

“They have also particularly affected companies listed in the Greek stock exchange as well as investment firms that rely on the local investments. Moreover, they imposed added difficulties on companies that planned to transfer their seat abroad, unless such companies had already established foreign bank accounts.”

Alexia Koufopandelis, an investment advisor said that the capital controls had “touched very severely the financial industry in Greece and it has been a one of the worst years for the Athens stock exchange since its establishment.”

She added: “Greek investors can only make investments with money that was already invested in securities before that date or with money coming from accounts held abroad.

“Money that was already in the banking system before that date is considered ‘old money’ and cannot be used for investment or in the Greek exchanges, nor for foreign trading.”

According to Koufopandelis, the Greek stock market suffered as international players and hedge funds liquidated their positions and could not be replaced by Greek investors who could not buy stock, resulting in Greek companies collapsing as their market value lost up to 90 percent of their value in three days.

A year on and despite the promises of the left-led Tsipras government, capital controls have left the economy in tatters.


Güncelleme Tarihi: 13 Temmuz 2016, 11:14