For Greeks living in the cash economy, the imposition of capital controls and a €60 daily limit on ATM use is nasty – even assuming they can find a stocked cash machine. Those who use plastic can shop as normal, as long as panic buyers have not stripped the shelves of their supermarket.
Signs of panic in the rest of the region were harder to spot. The euro, after an initial fall, ended the European trading day up. Peripheral bond spreads rose, but the rise in Portugal and Spain merely wiped out the optimism of last week (Italian spreads rose to their highest since November). German yields had their biggest swing since 2011, but ended where they stood just over a week earlier.
Eurozone bank shares fell 6 per cent for their worst day since 2012, the last time the currency’s boundaries were expected to shrink. Again, though, they merely reversed last week’s moves. The same story was told by soaring costs to protect bank bonds against default (see chart). Poor bank performance dragged Italian shares down 5 per cent, but they remain up a fifth this year.
Levels matter more than moves and suggest that, at least so far, there is no serious contagion emanating from Athens. There are both good and bad reasons for the lack of panic. On the plus side, exposure to Greece has been cut, and European rescue facilities together with the European Central Bank are far better positioned to prevent problems spreading than they were in the 2011-12 crisis.
Less solid is the widespread belief that Greeks will vote Yes to the euro on Sunday. The convoluted referendum question asks something quite different, and even a rebuff to their government may not prompt help from Brussels.
Even less certain is the hope that trouble in Greece will further delay rate rises from the US Federal Reserve, extending the easy money that has supported equities.
Finally, the euro’s rally may not be as hopeful a sign as it seems. It has become a “risk off” currency, tending to strengthen on bad news, because so much has been borrowed in euros to fund risky bets elsewhere. When worried traders close out those bets, they have to buy euros, pushing the currency up even if the problems are in the region.
We will find out just how much is at stake next week, if the Greferendum leads to Grexit.