GREEK banks suffered heavy outflows of deposits in February, figures released yesterday by the country’s central bank reveal.
Depositors withdrew €7.6bn (£5.6bn) during the month, leaving total private sector deposits at €140.5bn – 14.5 per cent less than end-November levels.
The figures support earlier reports in City A.M. that deposits had fallen to around €140bn before stabilising once Greece had its bailout extended by its Eurozone partners at the end of February. However, reports have said outflows picked up again last week.
The banks must borrow emergency funds to cope with the outflows, but these are capped by the European Central Bank (ECB) – a decision that has drawn criticism.
“In a banking crisis, the central bank should lend without limit on all good collateral,” Professor Forrest Capie of Cass Business School told City A.M. The former official historian of the Bank of England said: “Any cap on such lending would be wrong. If the Eurozone is a monetary union, the ECB as lender of last resort should in a crisis lend without limit on good collateral. If Greek banks turn out not to have good collateral they will fail for that reason.”