EU Commission Finds Greek Capital Controls ‘Justified’

People wait outside of a closed National Bank of Greece branch, in Athens, Greece, 29 June 2015. Greece imposed capital controls on 28 June to avert the collapse of its banks. EPA/BGNES

The European Commission said on Monday it finds the capital controls imposed by the Greek authorities to be ‘justified’ but called for the reinstatement of the free movement of capital as soon as possible.

Greece’s Prime Minister Alexis Tsipras announced capital controls in a televised address on Sunday night to prevent banks from collapsing under the weight of mass withdrawals after the European Central Bank declined to extend extra emergency funding to Greek banks.

Following an immediate, preliminary assessment of the Greek measures that introduce the controls, the Commission “finds them to be, prima facie, justified.”

“In the current circumstances, the stability of the financial and banking system in Greece constitutes a matter of overriding public interest and public policy that would appear to justify the imposition of temporary restrictions on capital flows,” the Financial Stability, Financial Services and Capital Markets Union Commissioner Jonathan Hill said in a statement on behalf of the European Commission.

The Commission also said that while the imposed restrictive measures appear necessary and proportionate at this time, “the free movement of capital will however need to be reinstated as soon as possible in the interest of the Greek economy, the Eurozone, and the European Union's single market as a whole.”

 

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