By A. Doga
Potential benefits of between 400 and 500 million euros per year for Greece’s battered banking sector is one result that is expected from the first review of the Greek program (third bailout), which was finally concluded on Tuesday evening in Brussels during a Eurogroup meeting.
The first review had been delayed for months, as negotiations dragged on between the leftist Greek government and its institutional creditors – Commission, ECB, ESM and the IMF.
Bank officials in Athens said the restoration of a waiver by the ECB for Greek banks’ borrowing needs, along with the first evaluation, will have positive benefits for market liquidity, the cost of borrowing and, just as importantly, in restoring confidence in the still “capital controlled” Greek economy.
Loosening of capital controls is a standing demand by Greek banks, with the first step being freedom of transactions for “new deposits” entering banks’ vaults.
Another prospective benefit will be the restoration of Greek bonds’ eligibility as collateral in the Eurosystem monetary policy operations, another development that will drive down the cost of borrowing from the ECB.
