Greek money outflows abroad seen much smaller than feared

London-based research firm CrossBorder Capital said on Thursday money flowing out of Greece on worries over the new leftist government’s standoff with its eurozone lenders has been much lower than feared.

This is despite a sharp decline in bank deposits and suggests the money still in the economy.

“It’s not the disaster many worried about,” said Michael Howell, the research firm’s managing director.

CrossBorder Capital, which has tracked flows for more the 20 years, said $177 million (156.2 million euros) flowed out of Greece last month, compared with $166 million in December and $149 million in November – sums much smaller than about $2.4

billion that left the country in August last year.

“The January data show that Greece has been more stable than many feared,” Howell said.

Greece had a 64.3 reading in the firm’s Global Liquidity Index in January, more than three times higher than the 29.0

reading a year earlier. A reading above 50 denotes expansion.

“It may well be the case that money is being taken out of domestic banks and put in foreign-owned banks within Greece, but there is little sign the economy is haemorrhaging funds,” he said.

Central bank data showed Greek banks suffered a 4 billion euro drop in household and corporate deposit balances in December and bankers estimate that about another 12 billion euros left the system in January.

Senior bankers in Athens told Reuters earlier this week deposit outflows have slowed so far this month, expecting household and corporate deposit balances to have fallen below 150 billion euros in January.

Bankers say that some savers, worried about the chance the country might be led out of the euro, have been switching cash deposits into mutual funds and foreign bonds. But unlike 2012, fewer have been opting to wire money abroad.

“Lets be clear, money may be leaving some Greek banks but it is not leaving the Greek economy,” Howell said.

“What’s happening is that people may be saying we don’t trust XYZX bank and they may be keeping money under mattresses or transferring it to foreign bank branches in Greece,” Howell said.