ECB concerns over cash flow

Bank of Greece Governor Yannis Stournaras informed his peers in the governing council of the European Central Bank on Wednesday about developments in Greece, although they did not form part of the meeting’s agenda, and presented the Greek central bank’s ideas for alternatives to state collateral to secure cash flow at local commercial banks.

According to sources, participants at the meeting were seriously concerned and disturbed by the increase in reports regarding a Greek eurozone exit as well as interventions by officials, politicians and analysts that are generating confusion and worries among the country’s citizens.

Stournaras made particular reference to the issue of the local credit system’s liquidity, which in recent weeks has deteriorated as a result of political and economic developments. Banking sources say that deposits in Greece declined by a total of over 3 billion euros in November and mainly December, while a significant outflow has been recorded in the first week of January, too.

The ECB board meeting also focused on the issue of state collateral that as of March will have to be replaced as a tool for banks to draw liquidity from Frankfurt. Stournaras presented the Bank of Greece’s alternative tools and guarantees that could be used for Greek banks to adjust to the new conditions without suffering any problems. The ECB decision to stop accepting state collateral for cash supply from March concerns the entire eurozone.

Greek banks, in cooperation with the ECB and the BoG, have examined a series of assets such as loan securitization that could be accepted as collateral by Frankfurt instead of state guarantees.

The Greek systemic banks have all come under ECB monitoring since last November and as Frankfurt’s officials have repeatedly stated, the support of the credit system’s liquidity will remain certain as long as the country remains in a bailout program and fulfills its obligations.