Even the interest rates of time deposits at Greek banks are approaching zero these days. Bank officials say that the rates will gradually decline from 0.5-0.6 percent today to 0.2-0.3 percent in the next few months.
The maintenance of the European Central Bank’s key interest rates at record lows for some time yet, as ECB President Mario Draghi recently announced, is opening the way for Greek banks to adjust their own rates accordingly.
Today time deposits at Greek lenders add up to about 44.6 billion euros, and their average interest rate stands at 0.5 percent. It is quite rare for a bank to make a better offer, and it would only be in order to attract a very good client from a rival credit institution.
If one factors in the inflation rate, the real yields of deposits in Greece are already negative, even before the upcoming reductions. The result of that is that an increasing number of depositors have been seeking alternative solutions to their time deposit accounts, such as mutual bonds or insurance programs that create capital. However, even they see their interest rates heading lower, although not as low as those on bank deposits.