Lifting of capital controls signals return to normalcy

In what is seen as a move symbolizing Greece’s return to normalcy, Prime Minister Kyriakos Mitsotakis Monday announced the full lifting of capital controls, earlier than the government had initially envisaged.

“Capital controls are as of today a thing of the past,” Mitsotakis declared in Parliament, adding that the restrictions had been imposed in June 2015 as a result of SYRIZA-led government policies that resulted in the flight of millions of euros from bank deposits.

Stressing that “a four-year cycle of insecurity” has come to an end, he said a “new cycle of optimism has begun for the economy and the banking system” and added that since his center-right New Democracy party was elected in July “faith has been restored in the Greek economy and banking system.”

For his part, Finance Minister Christos Staikouras lamented the capital controls as “a destabilizing factor, an instability factor for the banking system.” He added that the complete abolition of restrictions will be effective as of September 1.

The prime minister’s announcement came after officials of the Finance Ministry met with members of the country’s banks and the Capital Markets Commission earlier in the day.

Bank of Greece Governor Yannis Stournaras had recommended in July that the final restrictions be lifted after observing a continuing increase in bank deposits.

One of the key aims of the abolition of all restrictions is Greece’s upgrading by credit agencies, a move that will bolster investor interest.

Meanwhile, hours after the premier’s announcement, former finance minister Euclid Tsakalotos accused the government of piggybacking on his administration’s efforts to lift restrictions.

“The only reason that capital controls had not been fully lifted was the banks’ reluctance due to political uncertainty [caused by] the elections. In any case, this is a positive step, which was fully prepared by SYRIZA,” Tsakalotos said.

He said that the New Democracy government was benefiting from the SYRIZA administration’s economic legacy, adding that “we are still far from seeing a clear [ND] initiative.”

“Of course, in the case of New Democracy, not having its own economic policy is probably better than having one,” he added.