The Bank of Greece is preparing to take the major step of ending all curbs on consumer credit, at a time when the domestic market finds itself in great difficulty and hopes are pinned on an increase in consumer demand. Central bank governor Nikos Garganas is to discuss the issue with the board of the Hellenic Banks’ Association in a meeting today, where the last procedural glitches are expected to be hammered out. Garganas would like to free the system as quickly as possible, as keeping the restrictions goes against the obligations stemming from the Maastricht Treaty. If the commercial bankers can assure him that the Teiresias interbank credit monitoring system will be operative in July, he will lift the limits on consumer credit very soon. Garganas will also want assurances that banks will continue to maintain strict guidelines for lending and undertaking credit risks. At present, consumer loans are limited to 3,000 euros (1 million drachmas) for loans with little paperwork, to be spent at will, and 25,000 euros (8 million drachmas) for loans in which the customer provides the documents related to the purchases. In its calculations, the Bank of Greece is taking into consideration the substantial slowing down of credit expansion, which has dropped from 42 percent last year to 24-25 percent this year. At the same time, there is no problem of liquidity in the market. Another factor which argues in favor of the swift lifting of the last curbs on loans is the creditworthiness of businesses and how this may affect the banking system. According to the central bank’s figures on 450 listed companies, it appears that if companies of the financial sector are excluded, they have an average 5 percent growth in profits. Research into the European banking sector conducted by the European Central Bank, and which included Greek banks in the sample, showed that banks are granting loans with far stricter conditions than before. It was also noteworthy that the credit rating index of Greek banks was higher than the European average. Another issue to be discussed today is that of compound interest, which has led to exorbitant burdens on defaulting debtors. But there appears to be no solution on the horizon that would be acceptable to both banks and debtors.