ATHENS (Reuters) - Greek Finance Minister Euclid Tsakalotos said on Monday the timing for fully easing capital controls on the country was contingent on when public confidence was restored in its banking system.

Greece imposed capital controls a year ago to stem a flight of deposits from Greeks spooked at the ramifications of a financial crisis that almost cost the country its position in the euro zone.

"The more the public believes that the recapitalization process was indeed a good one, that the banks are indeed very stable, that we are indeed taking the appropriate measures to deal with the bad loans, if ... money starts returning to the banks, this will help lift capital controls," Tsakalotos told state broadcaster ERT1 in an interview.

"It's a continuous process of liberalization," he said.

Greece's economic performance would also play a key role, he said, adding that the finance ministry in the coming week would issue new guidance easing capital controls further.

Tsakalotos said he was confident an automatic mechanism of across-the-board spending cuts, dubbed "the chopper" by Greek media, would not be activated because Athens would meet its bailout target for a primary surplus of 0.5 percent in 2016.

Tsakalotos, a British-trained economist who taught economics before being thrust into Greece's economic morass a year ago, defended the track record of the country's left-led government in dealing with international creditors.

Greece held out negotiating its third international bailout in a tense standoff with creditors last year, which included Athens calling a referendum on further austerity. The public rejected those terms, but less than a month later Greece was forced to capitulate and accept a new financial lifeline.

"The clash was necessary," Tsakalotos said. "Europe needed to change."

(Reporting by Michele Kambas; Writing by Renee Maltezou; Editing by Peter Cooney)