As talk of Greece exiting the euro picks up, Greek depositors have read the writing on the wall and believe their cash would be safer buried in the back yard or sewn into a mattress.
Following the announcement yesterday that new elections will be held June 17 - and the likelihood that a radical socialist - Alexis Tsipras - would win, there was a $894 million run on Greek banks as panicked depositors are taking their money and running.
Political leaders in Athens were due to discuss an emergency government Wednesday to deal with a possible run on banks as it emerged Greeks withdrew almost $900 million in a single day, fearing their country could crash out of the euro currency by the end of the week.
An interim government would take the country through to new elections on June 17, triggered by the collapse on Tuesday of talks to form a coalition between winners of the inconclusive May 6 election.
Greeks are withdrawing euros from banks, apparently afraid of the prospect of rapid devaluation if the country leaves the European single currency and returns to the drachma.
President Karolos Papoulias warned of "great fear that could develop into a panic," the minutes of Papoulias' negotiations with political leaders showed, according to Reuters.
The minutes also reveal Papoulias was warned by George Provopoulos, head of the country's central bank, that savers withdrew at least 700 million euros ($894 million) on Monday.
"Withdrawals and outflows by 4:00 p.m. when I called him exceeded 600 million euros and reached 700 million euros," the president said according to the minutes of the meeting. "He expects total outflows of about 800 million euros."
Several banking sources told Reuters similar amounts had also been withdrawn on Tuesday. Nevertheless, there was no sign of panic or queues at bank branches in Athens on Wednesday. Bankers dismissed suggestions that a bank run was looming.
Unfortunately for the bankers, this is simply whistling past the graveyard. Reports from Athens say that lines at ATM's are long. A bank run doesn't look they way they appeared in the 1930's with desperate people queued up outside demanding their savings. This is the electronic age. With an ATM on virtually every corner and in many stores, a bank run can be invisible - but just as deadly.
One reason for people withdrawing their cash is that Tsipras said at the end of the campaign for the May 6 election that Greek bank deposits of ordinary citizens could be seized by the government to save the economy. Most wealthy Greeks have already moved their cash to German banks, but the average depositor is likely to get caught between a return to the drachma and a socialist fanatic who needs cash to fund his social programs.
If I were a Greek citizen, I'd be making plans to move.