OPINION

Our banking sector needs supervision

Fines which the Bank of Greece said it would impose on a handful of commercial banks, which it theoretically oversees, are quite ridiculous. The fact that in the Greek banking sector the spread between deposit and lending rates is double that in the eurozone and that the profits of Greek banks double or even triple every year point to a clear conclusion: the Greek banking market is not functioning as it should be and there is no competition. It is clear that our country’s credit institutions are applying harmonized practices at the expense of their customers, something that the central bank’s management should be averting. After all, this is one of its most fundamental roles. The 5.3-million-euro fine imposed upon five different banks by the central bank’s supervisory mechanism seems to have been a simple ruse to keep up the pretense that this mechanism is actually fulfilling its role. One bank alone reported net interest income of 697 million euros in just half a year – and this income had increased by 19.2 percent since last year. The fact that the central bank is shirking its responsibility to do its job does not just have a negative impact on Greek bank customers, who deposit their money at rates far below inflation and whose loans are burdened with unjustifiable charges. The central bank’s failure also hurts the national economy as the cost of money remains high for businesses. Clearly, the growth being sought by the Greek government faces another major hurdle: the banking sector, whose proper operation should be overseen by the central bank. The distortions in Greece’s banking sector and the lack of competition must quickly be rectified, for the good of the national economy. And these tasks are the obligation of the central bank – an obligation it should finally undertake and live up to.