A visitor looks at the columns of the Parthenon temple atop the Acropolis hill in Athens, June 14, 2015. REUTERS/Kostas Tsironis
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Just a few months ago, the possibility that capital controls would be imposed in Greece still seemed distant. But with the government fast running out of money – and nervous depositors pulling cash from the country's banks – talk of such extraordinary measures is widespread and analysts are warning Athens may soon be forced to employ them. Were Greece to default on a €1.5bn payment to the International Monetary Fund due at the end of June, the situation could spiral out of control, forcing the hand of policy makers. Greece could then be forced to repeat the experience of Cyprus and Argentina, which chose to intervene to stop the their banks bleeding deposits in order to avoid insolvency.Not everyone is convinced the "Cypriot solution" can be applied with the same results in Greece. For Cyprus, capital controls were one part of a wider rescue programme agreed with creditors to repair banks and restart the economy. Some economists warn that a more plausible comparison for Greece may be the Argentinan experience of 2001, which saw the Latin American country crash out of its fixed-exchange rate peg with the dollar, amid widespread financial and political turmoil.Another concern for the Greek government would be the ability to properly implement and monitor capital controls.
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