Will the 60 Euro per day withdrawal limit last?

30 June 2015 | Philip Ammerman

A conversation with a high school friend and articles in press about declining cash reserves in the Greek banking system have prompted this latest post.

According guidelines on capital controls issued by the Greek Ministry of Finance, there is:

A € 60 limit on daily withdrawals per bank deposit and/or depositor (this depends on the number of associated accounts using the same ATM card).

A € 120 / day limit for pensioners withdrawing their pensions: they are supposedly able to withdraw from the Hellenic Post Office and from a small number of bank branches that will open specifically for them. This applies only to pensioners with ATM cards: many do not.

No limits (up to normal withdrawal limits) on withdrawals by tourists, i.e. holders of foreign bank cards.

Online transactions within the country are supposedly normal. That is to say: salaries are being electronically transferred; credit card payments can be made online; etc.

There are a number of problems with these limits. The first is that pensioners will almost certainly not have full access to their pensions, either due to a lack of branches or cash points, or to a lack of cash. One pension fund has already indicated that there will be a payment delay.

The second is that foreign card holders have reported that they cannot withdraw up to their daily limit.

The third is that tremendous difficulties are being encountered with online payments. I know of several companies and institutions that have not been able to complete salary payments using the normal online system. (This may improve tomorrow).

There are no figures currently released on what the cash outflows are during capital controls. But I’ve done a quick analysis here.

I’m assuming approximately 3 million individual depositors and approximately 500,000 tourists or pensioners will be making withdrawals each day. Normal depositors can withdraw € 60/account; let’s assume tourists and pensioners withdraw € 120/day. The total amount withdrawn is € 240 million.

Is this a plausible number in terms of transactions? Yes. There are 5,449 ATMs in Greece. Assuming 3.5 million withdrawals, this is 642 transactions per ATM per day. Assuming withdrawals over an 18 hour period, this is 36 withdrawals per hour (or just under 2 minutes per transaction).

This calculation doesn’t take into account electronic transfers out of the banking system, which have the same effect as withdrawing deposits. So the actual rate of outflow is probably higher.

Given these constraints, I believe there is a strong chance that the ECB will either have to increase the ELA limit by Wednesday (or reduce the haircut on collateral), or the banking system will collapse and even € 60 withdrawals will no longer be possible. This assumes that the reports of less than € 1 billion in total liquidity buffers are true, and that this number is not replenished soon.

Philip Ammerman