European negotiations over the Greek crisis have broken down for seemingly the umpteenth time, and Greek Prime Minister Alexis Tsirpas has called for a referendum to be held on July 5, five days after the June 30 deadline for the current bailout extensions. But will the Greeks even make it that far? As Bloomberg reports, the slow-motion bank run we’ve been covering since January has accelerated rapidly:
Two senior Greek retail bank executives said as many as 500 of the country’s more than 7,000 ATMs had run out of cash as of Saturday morning, and that some lenders may not be able to open on Monday unless there was an emergency liquidity injection from the Bank of Greece. A central bank spokesman said it was making efforts to supply money to the system.
Some banks were placing limits in daily bank note and ATM transactions. Yiota Kardogianni, a manager at a branch of Piraeus Bank SA, said cash withdrawals were limited at 3,000 euros ($3,350) daily and ATM withdrawals at 600 euros. Alpha Bank AE had set a daily limit of 5,000 euros for most of its branches since last week.
As we’ve written before, the first rule of a bank panic is, don’t panic; but the second rule is, if there is a bank panic, panic first. It appears more and more Greeks are getting that idea.
As a result, the Greeks will essentially have two referenda—the formal one, on the bailout proposal, but also an informal one, on the soundness of their banking system, cast with ATM cards and withdrawal slips. That one will come first. If enough depositors withdraw cash by Monday, or next week, to trigger capital controls (which, as we’ve noted, are hard to undo), the referendum may well be rendered moot.