Capital controls made banks cash-sufficient


The local credit sector has enough liquidity to satisfy the economy’s needs as they have been formed following the imposition of capital controls, banking sources have said.

The central bank has accumulated a significant cash stock from the emergency liquidity assistance (ELA) available to local lenders and it is likely that in Wednesday’s European Central Bank board meeting there will be no further increase from the almost 91 billion euros available to domestic banks.

Bank officials tell Kathimerini that after the capital controls were introduced the cash flow problems has been resolved for banks and all of their attention has shifted to their recapitalization.

The proposal by the head of the Hellenic Bank Association, Louka Katseli, for a deposit of 10 billion euros to local lenders toward a future share capital increase was primarily aimed at an immediate boost to liquidity. If this proposal is adopted, banks would draw 10 billion euros in European Financial Stability Facility (EFSF) bonds as collateral to keep drawing liquidity from the ECB. However, banking sources say that the law on state collateral does not allow that.