Billions withdrawn from Greek accounts as European leaders call emergency summit

NEARLY $3 billion has been withdrawn from ATMs in Greece in three days with travellers warned to take extra amid fears banks might be forced to stay closed on Monday.

People line up at an ATM outside a branch of the National Bank, in central Athens, on Friday, June 19, 2015. Greece failed to secure a deal with bailout creditors on Friday, prompting the European Union to calls an emergency leaders' meeting for Monday. (AP Photo/Petros Giannakouris)

NEARLY $3 billion dollars has been withdrawn from Greek banks this week amid fears they won’t have enough cash to open on Monday, according to an EU official.

Speaking on condition of anonymity after a Eurozone summit failed to find a resolution to the debt crisis yesterday, the official told AP “money is going out of the Greek banks faster than at any time before.”

It represents around 1.5 per cent of the more than $194 billion Greek households and businesses have on deposit. Greek finance minister Yanis Varoufakis also warned: “We are dangerously close to a state of mind which accepts an accident. I told my colleagues not to accept such thinking.”

Greece urgently needs to strike a deal with its creditors — the European Union, European Central Bank and International Monetary Fund — to unlock about $10.5 billion in bailout funds it needs to pay debts and avoid a default by a 30 June deadline.

However five months worth of negotiations have now come down to the wire with an emergency summit called for Monday as the leaders can’t agree on the terms of the loan. Cuts to pensions and austerity measures in the country are a major sticking point.

Greek Prime Minister Alexis Tsipras has warned a Greek exit from the euro would be the “beginning of the end for the eurozone” but sounded upbeat after the talks. He said Monday’s summit is a “positive development” and those who “invest in crisis and horror scenarios will be proven wrong.”

People withdraw cash in Athens as a homeless person sleeps on the pavement. Picture: ARIS MESSINIS

However others aren’t so sure, with German Chancellor Angela Merkel warning her MPs they may need to accept a Greek exit from the euro. UK finance minister George Osbourne also said they “hope for the best but we must be prepared for the worst”.

“In the United Kingdom we’ve taken the measures to increase our economic security so we can deal with risks like this from abroad and clearly now we must go on and complete that plan.”

Greek banks could be subject to capital controls as early as this weekend or before the end of the month — including restrictions on withdraw and a potential tax on transactions.

Ordinary people have been opting to withdraw their money from ATMs rather than risk the uncertainty of an unknown currency. If the country does exit the euro it will be uncharted territory but one option could be to reinstate the drachma which salaries, wages and pensions would be paid in.

Yesterday the Greek Central Bank warned the country is on the verge of an “uncontrollable” crisis if leaders fail to reach a deal. Many fear it would be another watershed moment for the global economy that could start a chain of contagion that spreads across Europe into Spain, Italy and Portugal while affecting financial markets around the world.

To complicate things even further, Greek Prime Minister Alexis Tsipras has appeared as guest of honour at an international economic forum in Russia and the two countries have struck a deal for a new gas pipeline as a joint venture. President Putin’s aides have not ruled out Russia providing financial aid to Greece.

Greek Finance Minister Yanis Varoufakis said the country is “dangerously close” to an accident. Picture: AP/Virginia Mayo.

Travellers have been warned that banking services in Greece may become unavailable or limited at short notice.

“Make sure you have more than one means of payment with you (cash, debit cards, credit cards), and make sure you have enough money to cover emergencies and any unexpected delays,” the Department of Foreign Affairs warns.

The Association of British Travel Agents said if changes to the currency did happen it’s “highly unlikely” it would be overnight and likely euros would remain accepted.

“Holiday-makers heading out to Greece this summer are advised to take some cash in euros with them as well as other payment methods (credit/debit cards) so that they are covered for all situations. We would also advise them, as we would with any destination, to take out travel insurance as soon as they book their holiday to provide protection should they need to cancel.”

For more information visit the government’s Smart Traveller website.

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