The Best of GRReporter
flag_bg flag_gr flag_gb

Agreement with creditors or GREXIT - that is the question

17 June 2015 / 16:06:48  GRReporter
2098 reads

Governor of the Bank of Greece Yiannis Stournaras warned that the failure of negotiations with the creditors would have serious consequences for Greece - firstly bankruptcy, then subsequently exiting the euro zone, and finally the European Union itself. "It means a deep recession, dramatic drop in income, increased number of unemployed and the destruction of everything that the Greek economy has achieved during the years of membership in the European Union," said Yiannis Stournaras when presenting the report on the monetary development of Greece.
    The report states that deposit flight from Greek banks in the period December 2014-April 2015 amounted to 29.4 billion euro. Of this, only 4.4 billion euro were transferred to foreign bank accounts, another 5 billion euro went into investment funds, whereas the remaining 20 billion euro were withdrawn in cash and remained in Greece. Deposit flight has recently continued, the amount withdrawn from banks on Monday alone being 45 million euro and on Tuesday nearly 700 million euro.
    Banking analysts comment that the rate of cash withdrawals is abnormally high and explain it only with the fear of consequences of the rupture between Greece and its creditors. According to them, the situation is under control, as Greek banks have experienced similar situations amidst political instability in the past too.
    "The problem of deposit flight is a problem of confidence. When people fear that they will lose their deposits, they withdraw them and put the money under the mattress, as we say, in cash or transfer it abroad. This happened in 2012 when we had two consecutive election rounds with an uncertain result, and recently, from November until now, when too many billions came out of the banks," Ark Analytics analyst Kostis Lympouridis told GRReporter. According to him if tomorrow the Greek government came out and said, "We will sign an agreement withthe  creditors and will follow the programme," it will restore the confidence that there will be economic stability in the country and deposits will quickly return to the banks. "A citizen of Greece is not willing to keep his or her money in another country and engage in depositing and withdrawing money there, or to keep it in cash in hiding places, fearing robbery. The problem is not in the nature of banks but in the confidence in the government's actions," added Lympouridis.
    The decline of the Athens Stock Exchange continued for the fourth consecutive day and its index fell below the psychological level of 700 basis points to settle at 693.45 basis points.

Tags: GreeceCrisisCreditorsBank of GreeceYiannis StournarasDeposit flightGREXIT
GRReporter’s content is brought to you for free 7 days a week by a team of highly professional journalists, translators, photographers, operators, software developers, designers. If you like and follow our work, consider whether you could support us financially with an amount at your choice.
You can support us only once as well.
blog comments powered by Disqus