Greece’s rejection of the European Central Bank’s (ECB) initial bailout terms led the country into an extreme cash flow crisis; as the country’s banks lacked liquidity, they were forced to shut up shop to prevent a run on the banks. What’s more, capital controls were put in place to regulate cash flow and stop money being transferred out of the country.
ATM withdrawals are currently capped at €60 per day. But due to a lack of smaller denomination notes, they’re often limited to paying out €50. To prevent money leaving the country, foreign payments have been banned altogether, leaving many businesses unable to pay international suppliers for the goods and services they needed to keep their companies running.
As is often the case, difficult circumstances have given birth to some innovative solutions. And while Greece and the ECB have now agreed on a restructured bailout offer, this is conditional on the Greek prime minister successfully passing economic reforms through parliament. Even if these reforms are accepted in parliament, Greece’s cash flow problems are far from over.
As Greeks struggle to find functioning ATMs, developers in Greece have come up with a solution. A new app for Android devices called ‘Find ATM’ lets users know which ATMs are working. It also allows people to leave feedback, telling others whether the ATM is dispensing money – particularly the in-demand €20 notes – as well as the length of the queue.
Capital controls mean that international bank transfers and credit card payments outside Greece are restricted, which is having a damaging effect for some domestic businesses. To help, some larger companies have reportedly halted their payment requests to enable smaller Greek businesses to keep going.
Two entrepreneurs, John Vlachoyiannis and Panos Papadopoulos, have created a volunteer movement to help Greek start-ups unable to pay their operating costs. Their website, ZeroFund, enables small companies to ask for payment help to meet costs they can’t pay due to capital controls, such as web hosting charges. It then finds donors to support them and ease their cash flow problems.
Another alternative on the rise is Bitcoin, the controversial virtual currency. Some argue that it’s a way for Greeks to protect their money and avoid capital controls. A second Bitcoin “ATM” was recently installed in downtown Athens, allowing people to buy Bitcoins with normal money and also to change the virtual currency into cash. One of the benefits is that it’s not subject to the standard withdrawal limits. Although the value of Bitcoin has been on the decline since late 2013, it provides a way to circumvent the current cash flow restrictions.
Greek capital controls are set to stay in place for the time being, with Economic Minister George Stathakis suggesting they will continue for another two months. A leaked report by the International Monetary Fund implied that capital controls could continue for much longer, even if the bailout deal is passed. Although these capital controls may be less rigorous and restore a degree of normality to Greece’s beleaguered population, it remains to be seen which technological innovations will emerge out of the crisis.