Greece's Banks Reopen, But Cash Limit Still Drag on Economy
Greece's banks may be reopening, but citizens are still held hostage by limits.
— -- After a three-week shutdown, Greek banks reopened today, but people still aren't free to withdraw as much as they want or spend money freely.
For the past several weeks, Greeks have only been able to use online banking or ATMs. Today, the physical bank branches opened so customers can walk in to make deposits and withdrawals plus get access to their safe deposit boxes.
Greeks who do take money out of the bank to shop for everyday items face higher sales taxes, which were required as part of the austerity package that Greece agreed to in order to get emergency credit, Boston College economics professor Peter Ireland said.
Food
A kebab shop owner in Athens said new taxes may crush his business, especially as meat prices and business taxes increase.
"I can't put up my prices because I'll have no customers at all," Dimitris Chronis told the Associated Press, adding that sales have fallen around 80 percent since banking restrictions were imposed June 29. "We used to deliver to offices nearby but most of them have closed. People would order a lot and buy food for their colleagues on special occasions. That era is over."
Computers
Many Greeks have reportedly put their money in the past few weeks in expensive items like Apple computers for fear that their unstable cash will be worth less than those goods.
"Restrictions on cash withdrawals have been loosened, but only slightly," Ireland said.
New Withdrawal Limits
Before today, the withdrawal limit was 60 euros per day. Now, it is 420 euros per week instead of having to wait in line each day to withdraw their money.
“So the reopening of banks is largely symbolic," Ireland said. "It does not mean that suddenly, life for ordinary Greek citizens will be easier or more pleasant. But still, it is a sign that financial conditions have stabilized and, hopefully, this will be the first step on a long road back towards having the Greek economy run more normally.”
Barry Bosworth, of the Brookings Institution, called the recent banking measures "too limited."
"The reopening will help consumers and reduce anxiety, but it will not help the economy, which needs to be able to make cross-border transactions," Bosworth said. "They need to find a way to separate the banking system from the problems of the government budget."
The Eurozone does not have the equivalent of the U.S. banking system, which is independent of individual states, Bosworth notes.
"The withdrawal limits are still a huge drag on the Greek economy," said Bill Adams, PNC Financial Services Group's senior international economist.