After a long period of exclusion, Greek banks have resumed transactions in the interbank market, a sure sign that conditions are returning to normal and expectations are growing.
Bank executives say that lenders have recently completed transactions in the repos market amounting to 4-5 billion euros, using as collateral Greek treasury bills and other securities that were hitherto used only for drawing cash from the Bank of Greece’s emergency liquidity assistance (ELA) mechanism.
Until recently, transactions in the interbank market were only conducted using securities with a very high rating (i.e. bonds of the European Financial Stability Facility). The hesitant opening up of the interbank market to Greek banks is the effect of the stabilization of the economy after the completion of the first review of the country’s third bailout and the ensuing growth in confidence in Greece’s prospects.
Banks now say that a key point will be the completion of the second review: If it is completed in the next couple of weeks, it will signify a great step toward the complete normalization of the situation in the credit sector, the restoration of trust and the recovery of the economy in 2017. They add that the interbank market will start accepting some other securities such as loan portfolios, covered bonds etc as collateral for cash after the second review.