The unwillingness of the EU to extend their deadline to Greece has led to the implementation of capital controls in the country. On Friday the Greek Prime Minister Tsipras shocked the market by announcing that Greece would hold a referendum on July 5th so that the people of Greece may vote on the austerity measures demanded by the country’s creditors.

Although the ECB had been continuing to supply emergency liquidity the Greek authorities have decided to impose capital controls, by closing all banks and the stock exchange, to try to avert a potential collapse of their financial system. Daily cash withdrawals from ATM’s are limited to 60 euros whilst payments and transfers abroad have been banned.

Greece is due to repay the International Monetary Fund (IMF) $1.7bn on the 30 June and 3.5bn euros of bonds held by the ECB mature on the 20 July.Equity markets have initially shown a negative reaction this morning, with the FTSE 100 down 1.9% at the time of writing, with the German DAX down 2.92% and the EStoxx 50 down 3.38%.

Meanwhile the UK 10 year government bond yield has fallen 0.14% to 2.05%, the German 10 year government bond yield is down 0.18% at 0.74% whilst the Greek 10 year yield is up 3.46% at 13.94%. The rise in the Greek bond yield has seen some ripple in the European periphery with the Italian and Spanish 10 year government bond yields both up 0.25%.