(23 August 2016 – Greece) Bank deposits in Greece experienced a slight drop in July following two successive months of increases, new data from the country’s central bank shows.
Business and household deposits fell by €160 million (A$237 million), or 0.13 percent month-on-month to €122.58 billion, their lowest level since November 2003. They had risen by €1.04 billion to €122.74 billion in June.
The Greek banking system has seen only a small drip of deposit inflows a year after the country secured its third international bailout to stay in the euro zone. They remain dependent on central bank borrowing to plug their funding gap.
Greece's banking sector saw a €2 billion deposit outflow from December to July last year. Capital controls imposed mid-2015 year assisted a bit to contain the flight but sharply increased banks' dependence on emergency liquidity assistance from the Bank of Greece.
In July, the government further eased capital restrictions following progress on on bailout-mandated reforms and improved confidence in its banking system.
To lure deposits back in to their accounts, Greek banks are offering higher interest rates of up to 0.5 percent more than current term deposits. The government has also said that money hoarded during the economic downturn, otherwise known as “mattress cash”, will not be subject to the restrictions, meaning amounts deposited can be fully withdrawn.
Greece's deputy Finance Minister George Chouliarakis told parliament last month that the government projects a three to four billion euro capital injection into banks as a result of cash being redeposited.