Deposits to help ease price impact

Deposits to help ease price impact

The high level of liquidity built up during the pandemic will operate as the first dam to the stream of inflationary pressures on households and enterprises regarding the servicing of their obligations. The question is whether this liquidity will evaporate from the persistence of high inflation in the medium term.

Bank deposits have risen considerably since the outbreak of the pandemic. Despite the successive lockdowns, bank account balances approached a decade-high of 180 billion euros at end-2021, per the Bank of Greece, of which €135 billion belonged to individual depositors and some €44.8 billion to corporations.

The BoG analysis showed that between December 2019 and December 2021, private sector deposits expanded over €39 billion, or some 28%. Individuals accounted for €19.7 billion of that growth, and €19.5 billion came from businesses.

Part of that growth, at least concerning companies, is attributed to the increase in bank loans that have boosted their liquidity, while another part came from state support. The strengthening of online transactions also helped the emergence and recording of corporate revenues, which beforehand had concerned cash only.

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