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ATHENS – Bank of Greece Governor Yannis Stournaras, who failed to calm anxious customers as a mini bank-run was going on, said Greece must do as ordered by international lenders to lessen a liquidity squeeze and high funding costs.

Stournaras, who was finance chief in a previous coalition run by then-Premier Antonis Samaras, the New Democracy Conservative leader, said the current Radical Left SYRIZA-led Administration has no choice but to do what told, as did the former government.

Greece has struck a new deal with international lenders to keep money coming must meet fiscal targets and fulfill a series of reforms it has only vaguely detailed as part of the agreement with the troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that has put up 240 billion euros ($272.5 billion) in two bailouts since 2010.

Those came with attached harsh austerity measures that Stournaras backed while serving in the former government and which he said Prime Minister Alexis Tsipras now must do as well.

Greek banks lost more than 20 billion euros of deposits since early December, according to officials who asked not to be identified because the most recent data hasn’t been made public yet, Bloomberg news agency reported.

Stournaras told Bloomberg Television that more than 700 million euros of that has returned to Greek banks since the agreement, far short of what’s needed to end the cash squeeze, although even before that banks weren’t lending and were demanding austerity-crushed Greeks repay their loans.

New Democracy and the PASOK Socialists, who were in a previous coalition, owe banks 250 million euros, aren’t paying and aren’t being pursued for it.

At the same time he said the banks need money, Stournaras said they are in better position than before even though they were nearly brought to ruin again because of political instability.

The ECB has allotted Greece only 3.3 billion euros in additional emergency liquidity for the banks but at a higher cost of borrowing.

The ECB also removed the waiver on Greek government bonds for its funding operations left lenders dependent on Emergency Liquidity Assistance from the Bank of Greece, which carries a “substantially higher cost,” Stournaras said. The decision “will soon be re-examined and should be revoked,” he added.

“The capacity of the banking system to finance the real economy does not depend on capital adequacy alone, but also on its liquidity,” said Stournaras, 58, presenting the national central bank’s annual report on the state of the economy.

“Following the recent capital increases, Greek banks have a sufficient capital base, but their liquidity has come under considerable strain, especially in the last few months.”

 

The post Stournaras Says Cash Drought Hurting appeared first on The National Herald.

Source: The National Herald
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