Capital controls set to be lifted in full by early next year
The Finance Ministry and the Bank of Greece are planning to fully abolish the capital controls by the end of this year or early 2019, Kathimerini understands.
The first step is expected in the next few days with the lifting of restrictions on the socalled second pillar, which concerns the withdrawal of cash within Greece. Banking sources note that the current monthly limit of 5,000 euros makes little practical sense as it by far exceeds the needs of most depositors, so cash withdrawals will become unrestricted soon.
At the same time, sources say, there will be a further relaxation on the amounts that travelers and corporations can take abroad to conduct their transactions.
After that, the same sources note, if all goes well and there are no unexpected reactions for political or other reasons, the plan provides for the full abolition of controls by early next year at the latest.
Finance Minister Euclid Tsakalotos had hinted at an interview with Naftemporiki newspaper the relaxation of second-pillar restrictions and noted that Greece will then enter the final stage for the full lifting of capital transfers abroad.
However, sources warn that any reaction to the move would not just signal a delay to the final stage of control lifting, but may even generate the need for tighter controls to return, as there is already a high degree of liberty. One example of the risks cited is of fresh capital flight from depositors who have already returned money from abroad. Any such negative development that would lead to a fresh tightening of restrictions would obviously be disastrous for the economy.
Banking sources estimate that there are no financial risks on the horizon but warn that political risk cannot be ruled out, especially in case of an extended election period with repeat polls.
In any case the next step is expected very soon and is estimated to send a message of confidence in banks, whose stocks have recently been battered. Bank sources argue that the sector’s problems are linked to the difficulties the Greek state has in accessing the money markets and generally to the abstention of investors from Greece.