European banks lost more than 50 billion Euros ($56 billion US) as Greece shut its banks and imposed capital controls to attempt to prevent the collapse of its financial system.
Stoxx 600 Banks Index fell 4.4%, its largest dip since November 2011, with all 446 members declining.
Greece triggered a sovereign debt crisis in 2009, when foreign banks had a large exposure to its badly structured economy. In 2010, to avert a wider crisis, the European Commission, European Central Bank and International Monetary Fund responded by launching a 110 billion Euro bailout fund.
Greece no longer qualifies for membership in the EU and there are widespread fears it will exit. A new bailout comes with conditions, which has been put to referendum to be voted by the Greek people. Economists speculate an exit from the EU would cause a long and deep recession for Greece, beyond what it has suffered the last five years.
While Greece is not considered a socialist country, much of the massive Greek debt has been caused by the pervasive socialist policies with high and early pensions, massive social support welfare entitilements, socialized medicine, heavy business regulation and much more.