by Magda Panoutsopoulou
ATHENS, Greece
The Greek government closed banks and imposed capital controls on withdrawals leading panicked savers forming lines at ATMs to pull as much of their funds as possible.
Prime Minister Alexis Tsipras made a 2 a.m. local time televised speech, in which he plead for calm.
"The more calmly we deal with difficulties, the sooner we can overcome them and the milder their consequences will be," Tsipras said in a televised address. He promised bank deposits would be safe and salaries would be paid.
Banks will remain closed until July 6, the day after Greeks vote on a referendum to accept or reject bailout terms proposed by its European creditors.
The wording of the referendum has aroused controversy already, as opposition leaders, who support a 'yes' vote, claim that the government text will be biased against a vote in favor of the bailout.
The text is not yet public, but there are reports that a 'yes' vote would be linked to cuts in pensions, higher taxes, and loss of income.
Greece is expected to default on Tuesday on its $2 billion in obligations to the International Monetary Fund. Should default be declared, Greece will no longer be eligible for aid from the IMF.
On Saturday, Eurogroup finance ministers ruled that the current bailout could not be extended to Greece beyond its end date on Tuesday.
Greek banks may also no longer be creditworthy, and so may not be able to receive further aid from the European Central Bank. Without that liquidity, which is currently being used up as depositors pull funds, it is not clear whether Greek banks can stay open.
The government may also be without funds to pay pensions and for public services.
International efforts to find a solution to the crisis have inclued interventions from U.S. President Barack Obama, and U.S. Treasury Secretary Jacob Lews.
Lews called Tsipras early Monday morning with a demand that Tsipras find a compromise with creditors.
The euro fell 1.4 percent to about 1.10 against the dollar in trading on Monday morning, and Asian stocks opened sharply lower on Greek default fears.
