OPINION

Care needed in liquidity scheme

The 28-billion-euro safety net for Greek banks has now been enacted by law. But the government, which is financing the scheme by borrowing from abroad, must manage it responsibly and with sensitivity or else it may be viewed as abetting the plundering of public coffers. The government has a duty firstly to oblige the banks benefitting from the liquidity injection plan to refrain from paying out dividends to stockholders and bonuses to managers for 2008, which left them with healthy profits from high interest rates on loans. Secondly, the government must also oblige banks to capitalize the profits they will not be distributing and instead use them as a security net, should the financial situation worsen. These interventions by the government would be greatly assisted if Bank of Greece Governor Giorgos Provopoulos entrusted the monitoring of the distribution and management of the funds to the central bank’s services and the latter made a true assessment of the banks’ finances before the liquidity scheme is put into effect.