After a breakdown in talks between Athens and its creditors, Greece shuttered its banks and closed cash machines amid a climate of rumors and conspiracy theories that plunged the country deep into crisis on Monday.
Prime Minister Alexis Tsipras, who blindsided creditors by calling a referendum on the austerity cuts in the aid package proposed by the creditors, appeared on television on Sunday night to announce capital controls to prevent banks from collapsing, reported Reuters.
Their imposition capped a dramatic weekend for Greece that has pushed the country towards a likely default on $1.77 billion of International Monetary Fund loans on Tuesday and closer to an exit from the euro currency bloc.
French President Francois Hollande appealed to Tsipras to return to the negotiating table and German Chancellor Angela Merkel said she was willing to talk to the 40-year-old Greek leader if he wanted.
"There are a few hours before the negotiation is closed for good," Hollande said after a cabinet meeting on Greece.
But with Greece's bailout program expiring in less than 48 hours, hopes of a last-minute breakthrough were fading fast. Greeks – used to lengthy talks with creditors before a eleventh-hour deal materializes – were left stunned.
"I can't believe it," said Athens resident Evgenia Gekou, 50, on her way to work. "I keep thinking we will wake up tomorrow and everything will be OK. I'm trying hard not to worry."
European officials sent confusing signals about their next move. A spokesman for the European Commission told French radio that Brussels would not make any new proposals on Monday, appearing to contradict comments by EU Economics Commissioner Pierre Moscovici. He said a new offer was forthcoming and that the two sides were "only a few centimetres" away from a deal.
European bank shares fell sharply on Monday. Top banks in Spain, France and Germany were down more than 6 percent as the risk of a spillover to banks in other peripheral euro zone countries spooked investors.
The Greek government will keep banks shut at least until after July 5, the date of the referendum, and withdrawals from automated teller machines were limited to 60 euros a day when they reopened at midday. The stock exchange will also stay shut.
After months of talks, Greece's exasperated European partners have put the blame for the crisis squarely on Tsipras's shoulders.