Greece reels in shock as banks shut

ATHENS: Greeks woke up to shuttered banks, closed cash machines and a climate of rumours and conspiracy theories on Monday as a breakdown in talks between Athens and its creditors pushed the austerity-battered country to the brink.

After receiving no extra emergency funding for Greek lenders from the European Central Bank, Prime Minister Alexis Tsipras reluctantly imposed capital controls on Sunday night to prevent banks from collapsing under the weight of mass withdrawals.

Greece has less than 48 hours to pay back 1.6 billion euros ($1.77 billion) of International Monetary Fund loans, and a default would set in train events that could lead to the country's eventual exit from the euro currency bloc.

But after Tsipras angered Greece's international lenders by announcing a snap referendum on the terms of a cash-for-reforms deal, hopes of a last-minute breakthrough are fading fast.

"I can't believe it," said Athens resident Evgenia Gekou, 50, on her way to work. "I keep thinking we will wake up tomorrow and everything will be OK. I'm trying hard not to worry."

The government will keep banks shut at least until after July 5, the date of the referendum, and withdrawals from automated teller machines — which are shut on Monday — will be limited to 60 euros a day when they reopen on Tuesday.

After months of wrangling, Greece's exasperated European partners have put the blame for the crisis squarely on Tsipras's shoulders. The creditors wanted Greece to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.

As Tsipras announced the emergency measures late on Sunday, there were long queues outside ATMs and petrol stations as people raced to take out cash before it was too late. "I've got five euros in my pocket, I thought I would try my luck here for some money.

The queues in my neighbourhood were too long yesterday," said plumber Yannis Kalaizakis, 58, outside an empty cash machine in central Athens on Monday. "I don't know what else to say. It's a mess."