The Greek government issued a decree that forces localgovernments to transfer cash balances to the central bank, as debtto the International Monetary Fund (IMF) and month-end salarypayments come due.

“Central government entities are obliged to deposit their cashreserves and transfer their term deposit funds to their accounts atthe Bank of Greece,” the decree, issued Monday on a governmentwebsite, said. The “regulation is submitted due to extremely urgentand unforeseen needs.”

The move to effectively confiscate cash reserves currently heldin commercial banks and transfer them to the central bank couldraise about 2 billion euros (US$2.15 billion), two people familiarwith the issue said. The cash can then be used to meet obligationssuch as the repayment of a 770 million-euro tranche owed to the IMFon May 12, the people said.

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