A report in Germany’s Sueddeutsche Zeitung newspaper on Monday evening says European governments are ready to push for capital controls in Greece if there’s no deal this week.
Other European countries can’t make that move on their own — there’s no institutional procedure for the rest of Europe locking down an individual member state. Greece would have to pass its own law agreeing to the move.
We’re All Greek Now — Some Just Don’t Know It Yet
Let’s see…a heavily-indebted country can’t pay its bills, engages in a long series of failed attempts to manage a partial, controlled default, sees most of its capital flee to safer venues, and then, in a final act of desperation, imposes capital controls.
But it quickly realizes that it’s too late. Capital controls, to the extent that they ever work, have to be imposed by surprise, while there’s still some capital to control. If you wait until everyone expects them, the banks empty out in anticipation and you’ve locked a barn sans horses.