Greece's government to seize all private bank accounts?

(NaturalNews) The central bank of the cash-strapped Greek government has signaled that the country is liable to default on bailout loans issued by the International Monetary Fund and the European Central Bank by the end of June, thereby crashing out of the euro and perhaps seizing private bank accounts in the process.

As reported by the UK's Independent, European finance ministers are scrambling to develop contingency plans in case the Greek government makes good on threats to default if no agreement is reached to either downgrade the debt or extend payment options. Greek officials have not signaled a willingness to simply make the next payment, which is due at the end of June.

Athens is scheduled to repay €1.6 billion to the IMF on June 30, but it will be unable to do so unless its creditors release a €7.2 billion bailout payment before then, the paper noted.

In the meantime, talks between Greece and its EU and IMF creditors regarding a "cash-for-reforms" deal have fallen flat. The Greek prime minister, socialist Alexis Tsipras, has accused the nation's creditors of "pillaging" the country for the past half-decade.

Collapse of the euro or just a Greek exit?

"Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and, most likely, from the European Union," the Bank of Greece said in a statement. "Striking an agreement with our partners is a historical imperative that we cannot afford to ignore."

The central bank went on to note that €30 billion in deposits have been taken out of the Greek financial system since last October as Greek account holders shift their money in advance of a possible exit from the euro.

The Independent further reported:

The German Finance Minister, Wolfgang Schauble, told a parliamentary hearing in Berlin that his government is making contingency plans in the event of Grexit.

"We are prepared for all eventualities" said the Dutch Finance Minister, Jeroen Dijsselbloem, in the Hague. The Chancellor, George Osborne, also confirmed that the UK has stepped up planning to deal with the economic fallout.

If Greece does default on its debts, the ECB could decide to cut off support to the Greek financial system. That would force the government to impose capital controls, leading to government-imposed limits on how much savers could take out of their own accounts and transfer to overseas accounts.

When other EU nations have imposed such controls, it has generally led to massive withdrawals in advance of the controls being put in place. That, in turn, has led to wider, deeper financial turmoil, especially in markets as foreign investors come to the realization that they cannot pull their money out either.

At that point, it wouldn't take much for Greece to issue its own parallel currency and become the first EU nation to exit the Eurozone since it was first formed in 1999.

Government theft of bank accounts just like Cyprus?

In a sign demonstrating just how much relations with Greece have broken down, Jean-Claude Juncker, the president of the European Commission, accused Athens of lying to ordinary Greeks regarding the reforms being pushed by Brussels.

"I am blaming the Greeks [for telling] things to the Greek public which are not consistent with what I've told the Greek Prime Minister," he said.

Nevertheless, the Austrian chancellor, Werner Faymann, was more conciliatory towards Athens.

"For Europe to be stronger, it must show solidarity and support to any country which needs it," he said during a meeting with the Greek President Prokopis Pavlopoulos.

Tsipras and the ruling Syriza party are opposed to the harsh austerity measures imposed on Greece as part of the original bailout deals. He says the austerity measures have hurt Greek citizens, and their imposition is a blow to Greek sovereignty.

As for citizens' bank accounts, the government is likely prepared to help itself to deposits in order to generate revenue, much like the Cyprus government did to its citizens in 2013, when the government took 10 percent off the top of each account.

Sources:

http://www.independent.co.uk

http://www.naturalnews.com

http://www.bloomberg.com