Hoarded cash slowly making its way back
The cash depositors withdrew before capital controls were introduced in late June is slowing returning to the market, with banknotes of 100, 200 and even 500 euros making their presence in daily transactions.
The gradual return of this money also denotes a reversal of cash hoarding by households, as taxpayers are using what they have saved up to pay for every type of obligation.
At the same time, the continued sales of sovereign gold in 2015 far above purchases, reflected to a great extent the lack of liquidity in the average household.
Bank of Greece data show that the cash in the Greek market peaked during the first half of last year, when it exceeded 50 billion euros. This dropped to 48.6 billion euros in November, as Greeks began spending the money they had stored. In the same month household deposits fell to 100.9 billion from 102.9 billion euros in July.
The cash withdrawn since the summer remains at Greeks’ homes and is being used cautiously, mainly to cover tax obligations as well as to maintain some private consumption, as ongoing capital controls discourage people from returning their cash to the banking system.
