ECB lending to Greek banks still rising
Simon Ward
Post a Comment
The EU / IMF rescue package for Greece has failed to stem an outflow of funds from the country's banking system, according to Bank of Greece balance sheet data.
To bridge the funding gap, the central bank was forced to boost its lending to Greek banks from €93.8 billion at the end of June to €96.2 billion at end-July. Banks, meanwhile, reduced their deposits with the Bank of Greece from €10.0 billion to €7.5 billion, resulting in a combined transfer of €4.9 billion from the central bank.
Lending support of €96.2 billion at the end of July implies that the Bank of Greece is funding about 15% of Greek banks' assets. The ECB has acquired additional exposure to Greece, of perhaps €25 billion, via purchases of government bonds under its securities markets programme.
Lending to Greek banks now exceeds the €94.8 billion of loans extended by the Central Bank of Ireland to the Irish banking system as of the end of June. (The Irish figure is inflated by lending to foreign banks located in Dublin's international financial services centre.)
The ongoing loss of funds may revive concerns about the stability of the Greek banking system. Banks' ability to obtain additional ECB funding may eventually be limited by a shortage of eligible collateral.
View Printer Friendly Version
Email Article to Friend
Reader Comments