ECONOMY

Risks from new check extension

risks-from-new-check-extension

Checks that have stayed on ice for many months constitute a ticking time bomb for the economy, as they add up to 4 billion euros and will have to be cashed at some point, alongside the other accumulated debts of €40 billion.

The suspension of check payments is being extended for another couple of months, up to the end of October. According to an amendment inserted in a Finance Ministry bill, the deadline for the protection of check issuers is extended from August 31 to October 31, provided they are proven to have been hurt by the pandemic. This is a modification from the previous amendments, as the suspension of check payments will now only concern specific enterprises.

Since March 2020 the government has been extending the suspension of check payments, putting off obligations to the future. When the suspension expires and the dues will have to be paid, businesses are likely to have a hard time meeting their obligations. Although the precise sum of the suspended check payments is not known, banks put it at around €4 billion. 

Market professionals speak of a likely chain reaction in the economy when the checks come due.