Ministry, BoG to offer incentives to bring back deposits from matresses

Ministry, BoG to offer incentives to bring back deposits from matresses

The Finance Ministry and the Bank of Greece look set to exempt from capital controls any money that Greeks deposit in local banks that had previously been in safe deposit boxes at banks or under matresses at home. The aim is to attract cash kept in safe deposit boxes, estimated at over 30 billion euros.

The capital control-easing measures to be decided on in the next few days are also likely to include the full liberalization of the early payoff of loans. On the other hand, the weekly cash withdrawal limit will likely remain at 420 euros, with the only possible change being the introduction of a 14-day limit for withdrawing up to 840 euros from the first week.

Central banker Yannis Stournaras revealed the Bank of Greece’s intention to qualify the cash in safe deposit boxes and mattresses as “new money” in an interview with leftist newspaper Avgi on Sunday. Sources say this request is already on its way to the European Central Bank, whose approval is necessary for any change, no matter how small, to the capital controls.

“What applies to money from abroad will apply to the money that is being kept under mattresses," he said, “so anyone will be able to put it in and take it out of their account as they wish, without going under any capital control.” Sources add that the time is ripe for this move and is it expected to be immediately approved, offering bank clients the opportunity to deposit as much cash as they want into their existing accounts (as with money coming from abroad) without the money undergoing any control.

This move is seen as essential to restoring inflows into the credit system, which in May saw another reduction in its balance: Household deposits shrank by 760.1 million euros from April, to amount to 101.4 billion euros. In the last 12 months (since the capital controls were imposed) the drop in household deposits has reached 2.7 billion euros. And that is before income tax payments have even started, which is expected by end-July.

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