The ECB has agreed to keep its funding of Greek banks through the Emergency Lending Agreement at its current level, but not to increase it. Given a run on bank cash machines - partly encouraged by right-wing politicians and the right-wing Greek media - that means that Greek banks were in danger of running out of currency. Some already had. The government has, therefore, told the Greek central bank to declare tomorrow a bank holiday; banks and the Greek stock exchange will remain closed, and capital controls will be imposed to prevent excessive funds being taken out of the banks.
Let's be clear what the problem here is. For many things, people do not need currency. Many bills are paid by direct debit, other payments are made by credit or debit card. Even for smaller payments today, currency is not required. You can pay with ApplePay and similar electronic payment systems. Across large parts of Africa nowadays, many payments are made using cashless payments systems from mobile and smart phones. The problem is not a lack of money, or a need for currency - money in the form of notes and coins. So long as you have a positive balance in your bank account, you can pay bills and so on as normal by these electronic means.
The reason people are taking notes and coins from the bank accounts - and why the rich Greeks have taken money out electronically in transfers to foreign bank accounts - is a fear of what happened in Cyprus. That is, if the banks themselves go bust - and the Greek banks like nearly every other bank across the EU is really insolvent - then the money in the bank itself could just disappear. As Cyprus showed, and as the EU decided after that, savers deposits in those banks are not then safe. There is supposed to be the EU's €100,000 deposit guarantee scheme, but in a big financial crisis, that could be scrapped overnight. The EU policy now is that when banks go bust, the savers as well as the bondholders and shareholders get "bailed-in" to pay for it.
With that in mind, Greeks have been trying to get their hands on their money, before someone else does. When Cyprus went belly-up, a major cause, besides the fact that it had accumulated massive deposits, was that Cypriot banks were big buyers of Greek debt. They are likely to be some of the first to be hit once again, as Greece defaults, especially given they have not really recovered. But, their are numerous small countries, whose banks are at least or more exposed. Any savers in those countries would have been well advised to have been getting Euros out of the ATM's in those countries while they could, because, come next week, its anybody's guess, which country will be next to find its banks are in trouble, as the shockwave from Greece reverberates, and those other countries follow Greece in shutting the bank doors, and imposing capital controls.
The ECB, EU and IMF seem to have shown themselves not fit for purpose. No one can have any confidence that they will be up to the task as this crisis unfolds. In 2008, it was Gordon Brown who provided the lead that these governments, and institutions followed. Does anyone really believe that George Osborne can fulfil that role today. After all he is the one who crashed the UK economy after 2010, and despite all their hype, the UK economy today, is growing at just 0.3%! The IMF have called it wrong at almost every step, and Lagarde is just a politician put up as a PR front for the organisation, and whose stance changes with the wind, but always long after the event.
Under those conditions, its no wonder people in Greece are trying to get their hands on actual cash. The institutions are fiddling while the Treaty of Rome burns.
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