As euro exit looms, Greece shutters banks and announces capital controls

The moves follow parliament’s approval of a referendum on Greece’s debt negotiations

Greece's five-year financial crisis took its most dramatic turn to date Sunday, with the cabinet deciding, after an 8-hour session, that Greek banks would remain shut for six working days and restrictions would be imposed on cash withdrawals.

The Athens Stock Exchange would also not open on Monday, financial sector officials confirmed.

A decree published in the official Government Gazette stipulates banks will not open Monday morning and will remain closed through Monday, July 6. The finance minister could decide to short or extend that period.

Greek Prime Minister Alexis Tsipras said earlier in the day that the Bank of Greece had recommended that banks remain closed and restrictions be imposed on transactions, after the European Central Bank didn't increase the amount of emergency liquidity the lenders can access from the central bank

The move followed two day's of long lines forming at ATMs across the country, following Tsipras' decision to call a referendum on creditor proposals for Greek reforms in return for vital bailout funds. 

The prime minister appeared to blame the European Central Bank and tried to avert panic among Greeks in tweets that followed the announcement.

"The recent decisions of the Eurogroup and ECB have only one objective: to attempt to stifle the will of the Greek people," Tsipras said on Twitter.

"In the coming days, what's needed is patience and composure. The bank deposits of the Greek people are fully secure," Tsipras said in a separate tweet.

Withdrawals from ATM with credit or cash cards will be capped at 60 euros, or $66, daily. The decree said ATMs would be working at the latest 12 hours from its publication, meaning cash machines would open by early afternoon, at the latest.

Web banking transactions will be mostly free, allowing people to pay their bills online. However, they cannot move money to accounts abroad.

Credit and bank cards issued abroad can be used at the ATMs with no restrictions. This will benefit foreign visitors to Greece and the tourist industry. Many anxious tourists had joined locals at ATM lines on Sunday, thinking the restrictions would apply to them, as well.

For emergency needs, such as importing medicines or sending remittances abroad, the Greek Treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.

Earlier Sunday, Greek lawmakers authorized Tsipras' proposed July 5 bailout referendum, setting Greece on course for a direct vote by citizens that has enraged international creditors and increased Greece's chances of exiting the eurozone.

The government easily passed the 151-vote threshold needed to authorize the referendum. Greeks are due to vote on whether to accept or reject the latest terms offered by creditors to Athens in order to unlock billions of euros in bailout funds.

European partners have reacted negatively to the announcement of the referendum.

On Saturday, they rejected a request by Tsipras to extend the current bailout in order to cover the period leading up to the referendum. The Greek prime minister late on Sunday filed a renewed request for an extension of a few days for bailout.

Athens asked for an extension of Greece's bailout program beyond Tuesday — the day it is sheduled to pay 1.6 billion euros ($1.8 billion) to the International Monetary Fund. But the other 18 members of the eurozone unanimously rejected the request — making it likely that Greece would default on a key payment to the IMF.

Greek Finance Minister Yanis Varoufakis said Greece rejected the latest offer by creditors from the European Commission, the ECB and the IMF to unlock aid in return for more austerity because the deal wouldn't be likely to help Greece emerge from its economic crisis, Greek news website Ekathimerini reported.

Cuts in pensions, wage curbs and other measures of austerity have been "quite clear failures" since Greece first asked for aid in 2010, Varoufakis added, according to Ekathimrini.

survey published on Saturday said that two-thirds of respondents said Greece should remain in the eurozone and 57.5 percent said the government should back down and reach a deal with creditors, according to the Kapa Research poll for To Vima newspaper.

Al Jazeera and wire services

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