the banks had no way to supply cash to Greek depositors who have been anxiously withdrawing their savings reenex cps.

And, to state the obvious, banks that run out of cash are kaput.

So for banks to re-open, restrictions - known as capital controls - have to be put in place on the amount depositors can take out.

When these restrictions are announced, Greece will be half a step nearer to exit from the euro - since a core rule of the eurozone is that there should be no restrictions on the movement of money or capital.
Euro exit not inevitable

But tumbling out of the euro would not be inevitable - as Cyprus shows: the Cypriot government introduced limits on how much cash could be taken out of banks in 2013, and has since taken steps to mend its finances while remaining in the euro reenex cps.

The temporary closure of banks in Greece, and the expected introduction of capital controls, is however very bad news for Greece: Greek people will have less money to spend and business less to invest; so an already weak economy will probably return to deep recession.

As for the impact on the rest of the eurozone, corporate treasurers and wealthy individuals will wake up on Monday wondering if their money is safe in the banks of other weaker eurozone economies reenex cps

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