Bond issue not over

The dispute between the Finance Ministry and commercial banks over the issue of «popular bonds» appears set to continue, even though Economy and Finance Minister Nikos Christo doulakis did not make the expected announcement during his speech in the budget debate on Thursday. But, despite the strong reaction from banks, sources told Kathimerini that the government was thinking of reviving early next year the mechanism whereby the State will raise money by offering bonds to the public. These are expected to be of three-month, six-month and one-year treasury bills as well as two-year, three-year and five-year bonds, at market rates, so that the general public can have a broad range of alternatives to invest in now that savings deposit rates have diminished and even turned negative as interest rates have dropped. The State’s annual borrowing program comes to 26 billion euros, from which the general public is barred for the sake of banks. Government spokesman Christos Protopappas stepped into the issue yesterday. «Finance Minister Nikos Christodoulakis made clear that banks must carefully examine ways to improve yields for the citizen, as there are problems with savings deposits rates,» Protopappas said. «Returns must improve, the issue must be dealt with in a positive spirit by the banks and, if this does not occur, the government will look carefully at what measures can be taken to protect citizens’ interests.» The sources said that the government was considering raising up to 1.5 billion euros through the T-bill and bond issue, an amount which comes to about 1 percent of the money deposited with commercial banks. This figure is so small that there is cause to wonder why the reaction from banks has been so great. It is worth noting that for T-bills to be considered attractive, they must offer a return greater than that on repos, whose yield must be at least 3 percent now to be worthwhile. The banks, which appear to have calmed down somewhat after Christodoulakis’s retreat, now appear prepared to help him prepare a program of «popular issues» in a search for compromise. In other words, they want a method that will not affect the market, will not compete with banks and will also allow the government to help depositors.

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