De­posit out­flows from lo­cal banks sta­bi­lize in Au­gust

Kathimerini English - - Front Page - EVGENIA TZORTZI

The out­flow of bank de­posits was stemmed in Au­gust as a re­sult of the cap­i­tal con­trols in­tro­duced on June 28. Data from the Bank of Greece show that bal­ances had sta­bi­lized at 123 bil­lion eu­ros by mid-Au­gust, up from 122 bil­lion eu­ros at the end of July.

The flight of de­posits from Greek banks that be­gan when early elec­tions were an­nounced last De­cem­ber gained speed and reached un­sus­tain­able lev­els in the buildup to the July 5 ref­er­en­dum. Cap­i­tal con­trols were in­tro­duced to stem the out­flow and sta­bi­lize the bank­ing sys­tem.

Bank of­fi­cials say that the sta­bi­liza­tion of de­posits is still far from nor­mal. The 60-euro cap on daily cash with­drawals – 420 eu­ros per week – helps to con­trol the out­flow of de­posits from the banks, but the liq­uid­ity in the sys­tem is in­suf­fi­cient to meet the real needs of the econ­omy.

Given that the amount im­port com­pa­nies are al­lowed to send abroad via banks – 5 mil­lion eu­ros per bank per day – com­bined with emer­gency liq­uid­ity to­tal­ing 187 mil­lion eu­ros that has been made avail­able to the firms in two tranches, is enough to cover 30 per­cent of the needs of Greek en­ter­prises, the re­turn to nor­mal­ity seems a pipe dream at present.

The restora­tion of trust through the re­cap­i­tal­iza­tion of banks by the end of the year and en­sur­ing po­lit­i­cal sta­bil­ity are con­sid­ered key to a re­turn to nor­mal con­di­tions. A first step would be to in­crease the cov­er­age of the re­quired daily limit of the bank­ing sec­tor – around 150 mil­lion eu­ros a day – with small liq­uid­ity in­jec­tions, ei­ther by in­creas­ing the daily limit per bank or through emer­gency ap­provals of cu­mu­la­tive amounts.

Ac­cord­ing to es­ti­mates by the bank­ing sec­tor, cap­i­tal con­trols will be grad­u­ally eased in the com­ing six months.

The stem­ming of de­posit out­flows is largely due to the peak tourist sea­son, which brought an in­flow of new money into the mar­ket. How­ever, this trend will end with the tourist sea­son, while at the same time the au­tumn tax obli­ga­tions are ex­pected to re­duce liq­uid­ity in the sys­tem.

The next in­stall­ment of in­come tax by in­di­vid­u­als is due at the end of Au­gust, while the new ENFIA prop­erty tax is payable in Oc­to­ber and is ex­pected to re­move 2.6 bil­lion eu­ros from the sys­tem.

The flight of de­posits from Greek banks that be­gan when early elec­tions were an­nounced last De­cem­ber gained speed and reached un­sus­tain­able lev­els in the buildup to the July 5 ref­er­en­dum.

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