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Run on Greek banks as euro turmoil goes on

Greeks pull funds from banks; President forced to call new vote in June after his failure to cobble together coalition govt.

world Updated: May 17, 2012 02:03 IST

Greeks are withdrawing euros from banks, apparently afraid of the prospect of rapid devaluation if the country leaves the European single currency as their gridlocked political system prepares for a second general election.


The debt-laden country is headed for new elections in June following an indecisive vote and on Wednesday named a judge as caretaker premier amid growing fears over the country's eurozone future. Panagiotis Pikrammenos, the head of Greece’s top administrative court, was tasked with organising the next general election, which the semi-state Athens News Agency said would be held on June 17.

“This is clearly a caretaker administration whose sole purpose is to lead the country to elections,” Pikrammenos said.

President Karolos Papoulias was forced to call a new vote after failing to cobble together a coalition government. Polls suggest the anti-austerity radical left are poised to win the re-run. Central bank head George Provopoulos told the president that savers withdrew at least 700 million euros ($894 million) on Monday, the president told party chiefs.

“Mr Provopoulos told me there was no panic, but there was great fear that could develop into a panic,” the minutes quoted the president as saying.
"Withdrawals and outflows by 4:00 pm when I called him exceeded 600 million euros and reached 700 million euros," he said. "He expects total outflows of about 800 million euros."

Greeks have been steadily withdrawing funds from banks for months, and there has so far been no sign of queues at banks in Athens. The head of a major Greek business organization has lashed out at the country's politicians for failing to form a coalition government and triggering new elections, accusing them of acting like “undertakers”.

A national retail association leader Vassilis Korkidis said Wednesday that Greek party leaders had failed to act responsibly, threatening to place the country on a “course of catastrophe.”


Merkel, Hollande ask Greece to stay

French President Francois Hollande and German Chancellor Angela Merkel have stressed their desire to keep the eurozone together, as political strife in Greece threatened to push it out of the club.

Speaking after their first-ever talks on Tuesday, Merkel said: “We want Greece to stay in the euro”, a desire Hollande said he shared. Merkel said the two powerhouses were prepared “to study possibility of extra growth measures in Greece”.