Bonds for the masses

Economy and Finance Minister Nikos Christodoulakis will unveil today new «popular savings bonds,» designed expressly for those who have lately seen the real value of their money, deposited in savings accounts, decline. The 12-month bonds will, according to sources, be tax-free and yield 1 to 1.5 percent above the expected inflation rate. The bonds will be sold directly to the public either through local tax offices or the postal savings bank. The recent rate cut by the European Central Bank has led Greek banks to cut savings rates to as low as 0 percent, with most no higher than 1.5 percent. With a 15-percent tax on interest and inflation running at a 3.6-percent rate, real yields are negative. Commercial banks, fearing a run on deposits, especially by small depositors, oppose the scheme, pointing out the increased need for short-term debt servicing.