European Banking Authority: Greek banking system a special case

A European Banking Authority (EBA) report on Thursday, detailing liquidity measures under Article 509 governing cash reserve ratios, noted that "only one country, Greece, presents liquidity coverage ratio (LCR) average levels below 100%."

An accompanying footnote to the observation, on page 12, continues that "..due to the sovereign debt crisis, Greek credit institutions monetised their LCR liquidity buffer, resulting in LCR levels below the 100% minimum requirement. The possibility of monetising liquid assets during times of stress (resulting in an LCR below 100%) is foreseen under Article 412(1) of the CRR (and Article 4(3) of the LCR DR) as maintaining the LCR at 100% under such circumstances could produce undue negative effects on the credit institution and other market participants ... Greek credit institutions were required to submit plans for restoring compliance with the LCR requirement."

Further up the page, the EBA stressed that "...The majority of countries have LCR levels between 100 and 200%. Nevertheless, some countries present very high average LCR levels, such as Latvia, Romania, Bulgaria and Slovenia, with ratios above 300%, and Lithuania and Cyprus, with ratios above 200%."