Greeks Withdrawing Euros from Their Banks

Posted May 16th, 2012 at 2:15 pm (UTC-5)
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Greeks worried about the safety of their financial holdings are starting to withdraw large sums of euros from banks as the country ponders its fate in the 17-nation currency union.

The country's leaders reported that account holders withdrew about 700 million euros — nearly $900 million — on Monday as it became apparent that political leaders in Athens would not reach agreement on forming a new coalition government. With the stalemate, the country now is planning a new election June 17.

Bank activity appeared normal on Wednesday. Greek President Karolos Papoulias quoted central bank chief George Provopoulos as saying there was no panic, but that “there is great fear which could turn into panic.”

Doubts about Greece's continued membership in the eurozone have risen sharply in recent days. Numerous financial analysts say they think Greece will become the first country to leave the currency pact and revert to use of its one-time monetary unit, the drachma.

At the heart of the debate is whether Athens will adhere to its commitments to carry out sharp austerity measures in exchange for billions of dollars in assistance from the country's second international bailout in the last two years. European leaders have bluntly told Greece it must comply with the pact it agreed to or they will not send any more aid to the country.

But the Greek populace has grown increasingly angry at the social spending cuts demanded by the country's creditors, frequently taking to the streets in protest.