European finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing euro zone capital controls as a worst-case scenario should Athens decide to leave the euro.
EU officials said the ideas are part of a range of contingency plans. They emphasised that the discussions were merely about being prepared for any eventuality rather than planning for something they expect to happen.
But with increased political uncertainty in Greece following the inconclusive election on May 6th and ahead of a second election on June 17th, there is now an increased need to have contingencies in place, the EU sources said.
The European Commission said today it was helping with legal advice in discussions of contingency scenarios regarding Greece by the Eurogroup working group.
“I’ve not said that I’m not aware of any discussions, I’ve said I’m not aware about any plans, which is a slight difference,” Commission spokesman Olivier Bailly told a regular news briefing, when asked about Commission involvement in discussions about the contingencies were Greece to leave the euro.
“What I said also is that some people are working on scenarios. We are providing information about EU law, as the guardian of the treaty,” he said.
The discussions have taken place in conference calls over the past six weeks, as concerns have grown that a radical-left coalition, Syriza, may win the second election, increasing the risk that Greece could renege on its EU-IMF bailout and therefore move closer to abandoning the currency.
No decisions have been taken on the calls, but members of the Eurogroup working group, which consists of euro zone deputy finance ministers and heads of treasury departments, have discussed the options in some detail, the sources said.
Belgium’s finance minister, Steve Vanackere, said at the end of May that it was a function of each euro zone state to be prepared for problems. These discussions have been in that vein, with the specific aim of limiting a bank run or capital flight.
As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.
“Contingency planning is underway for a scenario under which Greece leaves,” one of the sources, who has beeninvolved in the conference calls, said. “Limited cash withdrawals from ATMs and limited movement of capital have been considered and analysed.”
Another source confirmed the discussions, including that the suspension of Schengen was among the options raised.
“These are not political discussions, these are discussions among finance experts who need to be prepared for any eventuality,” the second source said. “It is sensible planning, that is all, planning for the worst-case scenario.”
The first official said it was still being examined whether there was a legal basis for such extreme measures.
“The Bank of Greece is not aware of any such plans,” a central bank spokesman in Athens said when asked about the sources’ comments.
The vast majority of Greeks – some surveys have indicated 75 to 80 per cent – like the euro and want to retain the currency, something Greek politicians are aware of and which may dissuade them from pushing the country too close to the brink.
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