August 26, 2019 / 11:26 AM / 3 months ago

Greece to fully lift capital controls imposed during bailout chaos

ATHENS (Reuters) - Greece is fully lifting its remaining capital controls, Prime Minister Kyriakos Mitsotakis said on Monday, in a move signaling the economy’s continuing return to stability after the tumult of three international bailouts since 2010.

Greek Prime Minister Kyriakos Mitsotakis is acknowledged by members of his government and his lawmakers during a parliamentary session in Athens, Greece, August 26, 2018. REUTERS/Alkis Konstantinidis

“From today, capital controls are a thing of the past,” Mitsotakis told lawmakers in parliament.

Athens imposed capital controls in June 2015, when Greece was embroiled in a dispute with lenders over how to prop up an economy overwhelmed by a mountain of debt and its banks were bleeding cash.

At the time, the European Central Bank decided to pull the plug on emergency funding to Greek lenders, forcing a three week shutdown of banks and a 60 euro per day cap on cash machine withdrawals.

The restrictions have been gradually eased since then. The cap on cash withdrawals was fully lifted in October 2018. But limits on money transfers abroad still remained.

Restoring the free movement of capital will help to strengthen trust, attract investment and open the way for a further upgrade of the Greek economy’s credit ratings. Greece is still rated in the sub-investment category by ratings agencies.

“It marks a return to normality and growing confidence,” Bank of Greece Governor Yannis Stournaras told Reuters.

Mitsotakis’ new conservative government elected last month has been keen to move swiftly to reassure markets that it intends to adopt business-friendly policies to attract investment, key to boost Greece’s economic recovery.

Finance Minister Christos Staikouras told lawmakers he would submit legislation to fully lift the restrictions effective Sept. 1.

“Today a destabilizing factor, an instability factor for the banking system is lifted,” he said.

Greece emerged from its third and last bailout in August last year and has been restoring its access to international bond markets. Private-sector deposits have also been slowly returning to its banking system.

In June, the country’s central banker had told Reuters that Greece was on its way to fully lifting remaining restrictions on capital transfers this year.

Additional reporting by Karolina Tagaris and Angeliki Koutantou; Editing by Alison Williams

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