People make transactions at a counter inside a Piraeus Bank branch in the city of Iraklio on the island of Crete, Greece, yesterday. Greeks queued outside banks yesterday as they reopened three weeks after closing to stop the system collapsing under a flood of withdrawals, in the first cautious sign of a return to normal after a deal to start talks on a new package of bailout reforms.

Bloomberg
Frankfurt


Greece’s government said it’s repaying €6.8bn ($7.4bn) to creditors and depositors queued at reopened banks in the first signs of normality after last week’s bailout deal.
The country ordered payments yesterday to the European Central Bank, and the Greek central bank, a Greek Finance Ministry official said on condition of anonymity. The International Monetary Fund said Greece cleared arrears of €2bn. The euro rose on the news.
Repaying the ECB was the deadline Greece couldn’t afford to miss because a default would probably have forced the central bank to pull support from Greek lenders, all but ensuring the exit from the currency union. While banks reopened yesterday, Greek financial markets will remain closed at least through tomorrow, two officials said.
“As the realisation dawned that Greece was facing a very disorderly, painful exit from the monetary union, the government stepped back from the brink,” said Ken Wattret, an economist at BNP Paribas in London. “The issue of repayment to the ECB was pivotal, because failure to make the payment would have had a knock-on impact on the ECB’s willingness to continue providing Emergency Liquidity Assistance to the Greek banks.”
As Greece gets relief, steps towards a possible bailout of as much as €86bn are only starting. Parliament is scheduled to vote tomorrow on a second set of prerequisites for further financial aid, and German Chancellor Angela Merkel said the repayment terms for earlier aid loans can’t be eased yet. With the International Monetary Fund and ECB President Mario Draghi urging debt relief, Merkel ruled out a cut in the nominal value of Greek debt.
Greek stock and bond markets will only reopen after the lawmakers approve the second batch of conditions for the proposed bailout by the European Stability Mechanism, the euro area’s firewall fund, two Greek officials said yesterday.
The government is drafting a decree to allow selective waivers on capital controls, and the best-case scenario is for markets to reopen Thursday, one official said.
Greece will begin easing the €60-a-day restriction on cash withdrawals this week, National Bank of Greece Chairwoman Louka Katseli said on state television yesterday. Depositors will be able to access five days’ worth of cash — €300 — from this Friday and they’ll be able to get seven days’ withdrawals on August 1. Check deposits, access to safety deposit boxes and teller-window transactions have already been restored, though most transfers abroad are still prohibited.
That was good enough for Diana Sotiropoulou, 60, a retired restaurant owner waiting in line to pay her power bill at a bank in Varkiza, outside Athens.
“I’ll now be able to start paying bills again as I don’t have phone or Internet banking,” she said. “Before, there was no way I was going to wait in line for four days at an ATM to withdraw €240 to pay the bill.”
Greece’s payments yesterday comprised €4.2bn in maturing debt and interest to the ECB, €2.05bn to the IMF, and €470mn to the Bank of Greece, a second finance ministry official said.
An ECB spokeswoman declined to comment on whether the Frankfurt-based central bank had received payment.