Thursday, May 17, 2012
Greek banks, the euro and the ECB
May 17, 2012
Talk of a run on Greek deposits, and some banks being cut off from European Central Bank (ECB) support, have added a fresh twist to scary talk about Greece and the euro.
The details are complicated, and not quite as frightening as they first appear. But the big picture is scary indeed, not least for the ECB.
The numbers on how much has recently been taken out of Greek banks by depositors have been much disputed - not surprisingly, when the official figures will not be published for weeks.
Depending on who you talk to, anything from €700m ($892m; £560m) to €1.2bn was taken out of banks in the days after the election, out of total deposits of around €160bn. That total, in turn, is about a third lower than it was at the end of 2009.
At the same time, the ECB has apparently now said that it won't directly lend to some Greek banks that it judges to be technically "insolvent". These are banks that have holes in their balance sheets, because, thanks to the restructuring of Greek sovereign debt, they can't now expect to get back all of the money that they lent to the government.