Banks now us­ing T-bills in the mar­ket

Kathimerini English - - Focus - YIANNIS PAPADOYIANNIS

Af­ter a long pe­riod of ex­clu­sion, Greek banks have re­sumed trans­ac­tions in the in­ter­bank mar­ket, a sure sign that con­di­tions are re­turn­ing to nor­mal and ex­pec­ta­tions are grow­ing.

Bank ex­ec­u­tives say that lenders have re­cently com­pleted trans­ac­tions in the re­pos mar­ket amount­ing to 4-5 bil­lion euros, us­ing as col­lat­eral Greek trea­sury bills and other se­cu­ri­ties that were hith­erto used only for draw­ing cash from the Bank of Greece’s emer­gency liq­uid­ity as­sis­tance (ELA) mech­a­nism.

Un­til re­cently, trans­ac­tions in the in­ter­bank mar­ket were only con­ducted us­ing se­cu­ri­ties with a very high rat­ing (i.e. bonds of the Euro­pean Fi­nan­cial Sta­bil­ity Fa­cil­ity). The hes­i­tant open­ing up of the in­ter­bank mar­ket to Greek banks is the ef­fect of the sta­bi­liza­tion of the econ­omy af­ter the com­ple­tion of the first re­view of the coun­try’s third bailout and the en­su­ing growth in con­fi­dence in Greece’s prospects.

Banks now say that a key point will be the com­ple­tion of the sec­ond re­view: If it is com­pleted in the next cou­ple of weeks, it will sig­nify a great step to­ward the com­plete nor­mal­iza­tion of the sit­u­a­tion in the credit sec­tor, the restora­tion of trust and the re­cov­ery of the econ­omy in 2017. They add that the in­ter­bank mar­ket will start ac­cept­ing some other se­cu­ri­ties such as loan port­fo­lios, cov­ered bonds etc as col­lat­eral for cash af­ter the sec­ond re­view.

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