Banks open in Greece; repayment of debts starts

Updated on Jul 21, 2015 03:34 AM IST

The bank closures were the most visible sign of the crisis that took Greece to the brink of leaving the euro earlier this month, potentially undermining the foundations of the single European currency.

People wait to enter a Piraeus Bank branch at the city of Iraklio in the island of Crete, Greece. (Reuters Photo)
People wait to enter a Piraeus Bank branch at the city of Iraklio in the island of Crete, Greece. (Reuters Photo)
Reuters | By, Athens

Greece reopened its banks and ordered billions of euros owed to international creditors to be repaid on Monday in the first signs of a return to normal after last week’s deal to agree a tough new package of bailout reforms.

Customers queued up as bank branches opened for the first time in three weeks on Monday after they were closed to save the system from collapsing under a flood of withdrawals.

Increases in value added tax agreed under the bailout terms also took effect, with VAT on processed food and public transport jumping to 23% from 13%. The stock market remained closed until further notice.

The bank closures were the most visible sign of the crisis that took Greece to the brink of leaving the euro earlier this month, potentially undermining the foundations of the single European currency.

Their reopening followed Prime Minister Alexis Tsipras’ reluctant acceptance of a tough package of bailout demands from European partners, but a revolt in the ruling Syriza party now threatens the stability of his government and officials say new elections may be held as early as September or October.

“It is positive that the banks are open, though the effect is psychological for people more than anything else,” said 65-year-old pensioner Nikos Koulopoulos. “Because to be honest nothing much changes given the capital controls are still in place,” he said.

Limits on withdrawals will remain, however — at €420 per week instead of €60 per day previously — and payments and wire transfers abroad will still not be possible, a situation German Chancellor Angela Merkel said on Sunday was ‘not a normal life’ and warranted swift negotiations on a new bailout, expected to be worth up to 86 billion euros.

Greeks will be able to deposit cheques but not cash, pay bills as well as have access to safety deposit boxes and withdraw money without an ATM card.

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