By A. Doga
Greek banks have reportedly lowered expectations for a return of deposits that fled before capital controls imposed in the country last July, with a figure of three billion euros flowing into bank vaults until the end of the year now being circulated.
Even that modest figure, however, will depend on continued normalcy in Greece political and economic landscape. Expectations of a greater return of deposits and possibly a quicker elimination of state-imposed capital controls was a prospect at the beginning of the year, when the first review of the Greek program (third bailout) appeared on the horizon.
Nevertheless, a six-month delay in negotiations between creditors and the Greek government dampened economic confidence in the first half of 2016.
Restoration, by the ECB, of a waiver for Greek banks to use state bonds as collateral for borrowing from Frankfurt is expected to increase confidence in Greece’s battered banking system.
According to reports, a further relaxation of capital controls from import-export businesses is pending, with no word as yet on looser conditions for “new money” deposited in Greek banks.
