Nicosia: Greece, having failed to reach a rescue deal with its international creditors and get additional help from the ECB, may follow in the footsteps of eurozone member Cyprus and implement capital controls.
The Greek finance minister and central bank chief were due to meet Sunday, with speculation mounting Athens will slap on capital controls in order to stem a banking run as Greeks queue up in front of ATMs to withdraw cash.
Cyprus`s experience may provide insights on the impact capital controls may have on Greece.
The island was on the brink of bankruptcy in 2013 when it emerged that as part of an international bailout that was being negotiated with the European Union and the International Monetary Fund that depositors with more than 100,000 euros ($112,000) in the top two banks faced losing a chunk of their money.
That sparked a bank run, forcing the government to shut all banks for two weeks to halt the haemorrhage of cash from the island.
On the day that banks reopened on March 27, 2013, the government imposed capital controls that allowed savers to withdraw a maximum of just 300 euros a day -- the first such action in the European Union.
Company accounts were restricted to daily withdrawals of 500 euros, cheques could not be cashed in at the counter and inter-bank transfers were limited.
The measures crippled businesses in Cyprus, as it made it near to impossible for companies to pay suppliers or employees, particularly in the first few weeks of the restrictions.
Cyprus finally did a deal with its creditors that gave it a lifeline of 10 billion euros but which punished major savers.
Its biggest bank was liquidated and savers with accounts in the second biggest bank with more than 100,000 euros in deposits lost 47.5 percent of their savings above that threshold.
The restrictions also applied to international movements of cash, with a limit imposed on companies on money transfers abroad.
Leaving Cyprus with more than 1,000 euros in cash was also prohibited, a limit that was gradually raised.
Money transfers were also initially limited at 5,000 euros a month.
As the country slowly emerged from the financial meltdown, the capital controls were lifted gradually, including one scrapped in May 2014 that made it once again possible to open bank accounts.
Cypriots had to wait another year before all of the controls were finally lifted in April.
