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What action will the Greek banks take in the case that people start withdrawing their deposits?

14 December 2014 / 00:12:54  GRReporter
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The political and economic situation worries Greek banks about the likelihood of people, goaded by fear of unexpected developments, getting involved in a run-on-the-bank behaviour.

There has been no bleeding of capital from Greek banks for the time being despite the more hectic drawing from deposits, which happens every year at Christmas time. As a report in argues, the forthcoming January puts bankers in a state of alert. They believe that in the case of adverse political developments there is a genuine risk for a rerun of what the country experienced prior to the 2010 crisis. This time however there will be no safety net.

The report emphasises that instead of turning a blind eye, as it did back in 2010, this time the ECB will turn off the tap on funding once rating agencies reduce Greek debt to the ‘junk’ category. It will neither take interior quality bonds as security on Greek banks’ liquidity nor dispatch planes loaded with euro bills to fill up Greek cashpoints as it did in 2010 when Greek depositors were siphoning off their savings in force.

Bankers constantly keep in touch with the Greek national bank so that they could adequately respond to an eventual panic, which might prod people into reaching out for their stash.

According to the report, a plan was put together in late 2009 or early 2010, when Giorgios Provopoulos was Governor of the Bank of Greece. It will be immediately applied if necessary. The plan envisages, if not bank closures – something which is no longer taboo in the Eurozone as testified by the shut-downs of Cypriot banks – various restrictions on cash operations. E.g. limits on withdrawn sums or on exporting deposits overseas for personal (like university studies or medical treatment) or business (like payments for imported goods) needs.

Bankers believe the system might be seriously affected if people drain 10 or 15 billion euro from banks, which is not inconceivable. It is also pointed out that deposits are on a consistent downward trend. €250 million were chipped away from their bulk in October alone, and now they amount to €164.49 billion.

Tags: banks deposits withdrawals European Central Bank
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