Pressure for credit expansion
Finance Minister Christos Staikouras has asked Greek bank managers to increase loan issues and slash the cost of borrowing.
The idea is to expand credit mainly to small and medium-sized enterprises that constitute the backbone of the Greek economy and to have the necessary initiatives taken to allow SMEs access to bank financing without violating credit policy rules.
During a teleconference on the liquidity in the economy on Tuesday, the minister and the chief executives of the systemic banks agreed to convene again in mid-July, when the two sides will review the issue with specific data both on the number of enterprises considered solvent and on the average interest rates at which banks issue loans.
Also participating in the teleconference were representatives of chambers and sector associations. They explained the difficulties businesses face in securing financing, arguing that the majority of SMEs are excluded from bank credit, while the cost of money and the collateral required are prohibitive in many cases, even though banks borrow from the Eurosystem at negative interest rates. The banks countered that the Eurosystem cash flow only concerns a share of the cost of money, and stressed the insufficient demand from sustainable enterprises.
