As the prospect of Greece leaving the eurozone dominates headlines around the world, Greeks are reportedly lining up at ATMs and financial institutions to withdraw their funds in what some analysts have already described as the start of a run on the banks. More than a billion euros have been withdrawn just in the last few days. And experts say the panic could soon spread to other fragile countries such as Italy and Spain.
Even Greek officials acknowledged that the nation’s banks were teetering on the verge of a catastrophe as panicky depositors rush to salvage what they can of their savings. According to minutes of meetings cited in news reports, President Karolos Papoulias told political leaders that Greece’s central bank chief knew “there was great fear that could develop into a panic." He also warned that the banking system might run out of money, posing a “threat to our national existence.”
While those fears may not have become a full-blown bank-run crisis just yet, that moment could be fast approaching. "Withdrawals and outflows by 4:00 pm when I called him exceeded 600 million euros and reached 700 million euros," Papoulias was quoted as saying, citing central bank boss George Provopoulos. "He expects total outflows of about 800 million euros, including conversions in German Bunds and other such things."
Between early 2010 and March of this year, Greeks withdrew about one third of the nation’s total bank deposits — more than 70 billion euros. Some of the cash was stashed under mattresses or transferred to safer banks overseas. Facing a deep economic crisis, steep pay cuts, medicine shortages, and surging unemployment, many Greeks were forced to spend their meager savings just to survive.
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Photo: In this April 29, 2010, file photo, (right to left) Greek, National Bank of Greece, and European Union flags outside the headquarters of the National Bank of Greece in Athens: AP Images