“New money” in banks – deposits to which the capital controls do not apply – are close to 30 billion euros, according to banking sources. In just one year the amount has doubled, as in early 2017 it stood at some 15 billion euros.
The term “new money” concerns all kinds of new deposits: funds returning from abroad, deposits that had been invested in investment products abroad for safety reasons, and cash being redeposited in banks after being stashed away in people’s homes.
The main source of new money is the redepositing of cash by corporations and individuals. Every euro deposited in banks by supermarkets and other enterprises, gas stations, OPAP gaming agents, freelance professionals and so on is considered new money and is not subject to the capital control restrictions, so it can be freely transferred abroad, for example.
If somebody withdraws 1,000 euros (to which the capital controls apply) from their bank account and uses it to make payments to supermarkets, utilities etc, when the companies put it into their bank accounts, it will be deemed to be new money.
Bank officials say that the considerable increase in new money is a significant sign of confidence in the credit system and the country in general. New money now amounts to 24 percent of household and business deposits in Greece, and the more it increases, the more the conditions will improve, eventually allowing for the easing of the capital controls.
For restrictions to be relaxed, banks estimate that the next major steps will come after the completion of the bailout program in August, which would require that the positive estimates concerning the course of the economy prove correct.
A decisive factor for the future course of deposits will be the results of this spring’s stress tests, which constitute an uncertain factor. If domestic banks pass the test successfully, confidence will improve significantly, accelerating the inflow of returning deposits and paving the way for the full lifting of capital controls in the medium term.
Bankers are already anticipating an increase in deposits by at least 7 billion euros this year, coming from the return of cash in mattresses and safe deposit boxes, and from investment products abroad. At end-December deposits amounted to 126.35 billion euros.