A Greek euro isn’t really a euro any more

As investors handicap the odds of Greece leaving the euro and resurrecting the drachma, Greece’s decision to impose capital controls has already violated a key concept behind Europe’s currency union, one economist argues.

The Greek government over the weekend declared a bank holiday beginning Monday and running through a July 5 referendum on the terms demanded by Greek creditors. In addition, the government is limiting withdrawals from ATMs to 60 euros ($67.50) EURUSD, -0.4094% a day and has forbidden the electronic transfer of funds outside of the eurozone, along with imposing other measures.

The problem is that capital controls “are a contradiction in terms to monetary union,” wrote Guntram Wolff, director of the influential Brussels-based Bruegel think tank, in a blog post Monday.

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