BBC World Service

Greek citizens pulling money from banks

David Brancaccio May 16, 2012

David Brancaccio: With a new general election on the way in Greece and the country’s membership in the European single currency in the balance, people in Greece are trying to keep their bank accounts from losing value if ever the euro is dropped. Greece’s central bank chief says depositors pulled about $900 million out of bank accounts Monday alone.

Joining me from Athens is the BBC’s Richard Galpin.  Good morning Richard.

Richard Galpin: Morning to you.

Brancaccio: What do we know about depositors taking their money out of bank accounts there?

Galpin: Well I have to say, this was customers, ordinary customers and some businesses and that’s just on one day. And obviously, that was before the talks to try and form a coalition or national unity government had completely collapsed and therefore Greece was going to move towards a second election. So if it does signal perhaps the start of some kind of run on the banks, that would be very very worrying.

Brancaccio: Have you actually seen any lines at banks above normal?

Galpin: No, I haven’t but let’s wait and see what happens today because obviously we will have the chance for people to have digested what happened with the collapse of the talks and see whether they are now going to react even more. And you know, obviously, people have been taking money out of their accounts over the past couple of years ever since the austerity measures. If the figures really start picking up, then we know we are in a situation with a run on the banks which could lead to a default and an exit of Greece from the euro zone very quickly indeed.

Brancaccio: Is there anything the Greek authorities could do about this?

Galpin: It’s very difficult. One, they can try and reassure the population. And the other thing is to try and impose capital controls but if my understanding is correct, then being part of the euro zone, they cannot do that legally. So it’s only if they actually pull out, default, and revert to the drachma can they then start imposing capital controls to stop the flight of capital out of the country.

Brancaccio: The BBC’s Richard Galpin. Thank you very much.

Galpin: Thank you.

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