– Long lines at ATMs and bank branches in Greece made investors across the globe shaky Monday, as the nation’s financial crisis caused international markets to plunge.
Greece has closed its banks for the week and imposed restrictions on money withdrawals and banking transactions, to keep its financial system from collapsing.
The government has imposed a stringent daily limit of 60 euros ($67) on cash withdrawals from ATMs this week. The banks and the country's stock market have been closed for the week after Prime Minister Alexis Tsipras' surprise call for a referendum next Sunday on creditor proposals for reforms Greece should take to gain access to blocked bailout funds.
The euro hit its weakest level against the pound since 2007 as international markets reacted to the Greek crisis, Sky News reported Monday. European stock markets also closed considerably down, with the German DAX losing 3.6%, and the CAC 40 in Paris down 3.7%.
Banking stocks in Italy, Portugal and Spain bore the brunt of the sell-offs, as contagion to the problems in Greece emerged for the first time since 2011 - the height of the eurozone debt crisis.
The FTSE 100 in London fell 2% at the close of trading on Monday evening as British Prime Minister David Cameron said he sees Sunday's referendum in Greece as essentially a vote on remaining in the eurozone -- and that it is for the Greek people to decide.
Although Europe suffered much bigger losses, U.S. stocks fell as well. The Standard & Poor's 500 index was down 29 points to 2,071 as of 2:00 p.m. Eastern. The Dow Jones industrial average fell 239 points, 1.34 percent, to 17,707, and the Nasdaq composite fell 81 points, to 4,998.
China's main stock market fell 21.5% from a high on June 12, crossing the 20% threshold that defines a bear market, Dow Jones reported Monday. Other Asian markets tumbled after Greece closed its banking system. Australia's S&P/ASX 200 index fell 2.2% and Japan's Nikkei 225 Stock Average fell 2.9%.
But it was Greeks who worried most Monday. Senior citizens looking to collect their monthly government benefits swarmed closed bank branches in the hope of getting their checks, and lines formed at ATMs as bankers gradually began dispensing cash again following the imposition of strict controls on capital.
Tsipras is advocating Greeks reject the creditor proposals, in the popular vote, which increasingly has the look of a vote on euro membership itself.
The referendum asks Greeks to vote on a simple question: "Should the proposal which was submitted by the European Commission, the European Central Bank and the International Monetary Fund at the Eurogroup of June 25, 2015, which consists of two parts that together consist of their comprehensive proposal be accepted?”
Without a deal to extend the bailout program expiring on June 30, Greece will lose access to the remaining 7.2 billion euros ($8.1 billion) of rescue loans, and is unlikely to be able to meet a 1.6 billion-euro debt repayment to the International Monetary Fund due the same day.
The uncertainty drove Greeks to banks and supermarkets Monday as fears of disruptions to gas and medicine supplies grew, Reuters reported.
"I came here at 4 a.m. because I have to get my pension," said 74-year-old Anastasios Gevelidis, one of about 100 retirees waiting outside the main branch of National Bank of Greece in the country's second largest city of Thessaloniki.
"I don't have a card, I don't know what's going on, we don't even have enough money to buy bread," Gevelidis said.
Investors around the world are worried that should Greece leave the euro and say it can't pay its debts, which stand at more than 300 billion euros, the global economic recovery could be derailed and questions would grow over the long-term viability of the euro currency itself.
President Obama and French President Francois Hollande discussed the Greek debt crisis by telephone Monday, White House spokesman Josh Earnest told reporters.
"The President reiterated to President Hollande something that we have indicated in the past which is that it's important for the parties sitting around the negotiating table to develop a package of reforms and financing that would allow Greece to return to growth and debt sustainability within the Eurozone," Earnest said.
Earnest also wanted to make it clear that the Greek crisis is not a direct threat to the U.S. economy. "The fact is the U.S. exposure to Greece is small in terms of our direct exposure and for that reason - and this was true even at the previous height of the Greek crisis back in 2010 and 2011 - that Greece does not pose a major direct risk to our banking system," Earnest said.
But for many elderly Greeks who don't have bank cards and make withdrawals in person at bank branches, Monday's reality is much more frightening. "Nobody knows anything. A bank employee came out at 8 a.m. and told us `you're not going to get any money,' but we're hearing that 70 branches will open," Gevelidis said.
Deputy Minister of State Terence Quick said special arrangements would be made for pensions, telling private Antenna television that pensions would be dispensed in full.
The daily withdrawal limit wouldn't be enough to cover many basic necessities. "What can I do first with 60 euros? I owe 150 just to the pharmacy," Gevelidis said.
Although credit and cash card transactions have not been restricted, many retailers were not accepting card transactions Monday morning. Electronic transfers and bill payments are allowed, but only within the country. The government also stressed the controls would not affect foreign tourists, who would have no limits on cash withdrawals with foreign bank cards.
The capital controls are meant to staunch the flow of money out of Greek banks and spur the country's creditors to offer concessions before Greece's international bailout program expires Tuesday.
The accelerating crisis has thrown into question Greece's financial future and continued membership in the 19-nation shared euro currency -- and even the 28-country European Union.
"The images of queues at ATMs in Greece are stripping traders of what little confidence they have left in the nation, and the financial earthquake that happened in the eurozone over the weekend can be felt around the world," said David Madden, market analyst at IG.
Tsipras announced the capital controls in a televised address Sunday night, blaming the eurogroup, the gathering of the eurozone's finance ministers, and its decision to reject an extension request for the bailout program. He has asked again for the extension to allow for the referendum.
French Finance Minister Michel Sapin said talks with Greece could resume at any time, while Pierre Moscovici, the European commissioner for economic affairs, said negotiations were cut off when an agreement seemed within reach.
The situation now largely rests on a `yes' vote in Greece, Moscovici said.
The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours of Sunday, shocked and angered Greece's European partners. The country's negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.
Greece is dividing into two camps ahead of the referendum. A demonstration is planned in Athens later Monday by those against the proposals from the creditors. Another is planned for Tuesday by those who want to make sure that Greece's position in Europe is not threatened.
Tsipras also blamed the European Central Bank's Sunday decision not to increase the amount of emergency liquidity the lenders could access from the central bank -- meaning Greece has no way to replenish fast-diminishing deposits.
"It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum," Tsipras said. "They will not succeed."
"I can't believe it," Athens resident Evgenia Gekou, 50, told Reuters 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."
The Associated Press contributed to this report.