EU has contingency plans for Greece currency exit

EUROPEAN finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing Eurozone capital controls as a worst-case scenario should Athens decide to leave the euro.

EU officials have said the ideas are part of a range of contingency plans. They emphasised that the discussions were merely about being prepared for any eventuality rather than planning for something they expect to happen – none of the sources expects Greece to leave the single currency area.

But with increased political uncertainty in Greece after the inconclusive election on 6 May and ahead of a second election on 17 June, there is an increased need to have contingencies in place, the EU sources said.

The discussions have taken place in conference calls over the past six weeks, as concerns have grown that a radical-left coalition, Syriza, may win the second election, increasing the risk that Greece could renege on its EU/IMF bailout and move closer to abandoning the common currency.

No decisions have been taken on the calls, but members of the Eurogroup Working Group, which consists of Eurozone deputy finance ministers and heads of treasury, have discussed the options in some detail, the sources said.

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the EU.

“Contingency planning is underway for a scenario under which Greece leaves,” one of the sources said. “Limited cash withdrawals from ATMs and limited movement of capital have been considered and analysed.”

Another source confirmed the discussions, including that the suspension of Schengen was among the options raised.

“These are not political discussions, these are discussions among finance experts who need to be prepared for any eventuality,” the second source said. “It is sensible planning, that is all, planning for the worst-case scenario.”

The first official said it was still being examined whether there was a legal basis for such extreme measures.

“The Bank of Greece is not aware of any such plans,” a central bank spokesman in Athens said.