The Joplin Globe, Joplin, MO

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May 16, 2012

Are Greece’s euro fears causing a $1-billion bank run?

Los Angeles Times (MCT)

Greek officials were busy Wednesday cobbling together an emergency plan after talks to form a coalition government disintegrated Tuesday. In the meantime, Greeks have withdrawn $900 million from local banks.

So said President Karolos Papoulias, according to minutes of a government meeting procured by Reuters. Papoulias, in turn, was quoting George Provopoulos, governor of the Greek Central Bank, who said depositors took out 700 million euros earlier this week and will likely withdraw at least 100 million more.

During negotiations, Papoulias warned political leaders of a “great fear that could develop into a panic” as Greeks worry about the fate of the euro in their country should their government withdraw from European Union and its common currency.

Commentators have suggested that scheduled June 17 elections could see the euro discarded in Greece in favor of the drachma — a switch being dubbed the “Grexit.”

Twitter user Russian—Market posted photos showing several people waiting to use ATMs with the caption: “Here we go. First lines at Greek ATMs.” Others wondered whether withdrawals might be amplified online, where many Greeks do their banking.

Greeks have withdrawn 72 billion euros since January 2010, leaving bank deposits with 165 billion euros in March, according to the central bank. Social media users were buzzing Wednesday about rumors that Greek banks had set a withdrawal limit of 50 euros on accounts.

But some Greeks scoff at the “bank run” characterization, referring to the mass withdrawals as more of a “bank jog.” Reports out of Athens found no signs of lines outside banks. A facetious site has popped up parodying the country’s “leaking” banks.

But without doubt, the economic situation in Greece in precarious. Mario Draghi, president of the European Central Bank, said Wednesday in Frankfurt, Germany, that the bank’s “strong preference is that Greece will continue to stay in the euro area.”

 

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