Greece: The ECB Turns Off The Taps But Doesn’t Pull The Plug

Greece looks on the verge of imposing capital controls Sunday after the European Central Bank said it wouldn’t authorize any more emergency loans to the country’s banks.

The ECB’s governing council met earlier in the day to decide what course to take after a dramatic Saturday on which the Eurozone and International Monetary Fund decided they wouldn’t extend the country’s bailout beyond Tuesday and Greece’s parliament passed a government motion confirming a referendum next Sunday.

Although the Frankfurt-based central bank didn’t demand the immediate repayment of over €85 billion ($94 billion), its decision nonetheless puts enormous pressure on the Greek banking system, as it means there will be no more funds available to meet surging demand for cash from panicking savers around the country.

Greece’s central bank governor Yanis Stournaras said in the ECB’s statement that his institution “will take all measures necessary to ensure financial stability for Greek citizens…