Savings bank accounts of the Greeks are growing

The total volume of cash deposits in Greek banks reached 184.715 billion euros at the end of November, up 1.668 billion euros more than in the previous month and 9.3% more than in November last year.

There was an increase in both corporate deposits and private savings deposits. On the contrary, the number of term deposits continues to decline.

In particular:

Private sector deposits increased by 1.833 billion euros compared to the previous month to 175.658 billion euros. This is 10.45% more than last year. Increase in deposits up to 43.235 billion euros from legal entities (companies). Of these, the deposits of non-financial corporations increased to 38.1 billion euros (the remaining approximately 5 billion euros are deposits of insurance companies). The total volume of deposits of individuals and households amounted to 132.423 billion euros.

Healthy economy sign

The pattern of deposits shows that people are probably looking for a higher return than leaving money on time deposits (restriction on withdrawals for some time, in connection with which an increased interest is provided on the amount deposited by the depositor).

The total number of term deposits decreased by 813 million euros in November, reaching 28 billion euros. The reason is simple: term deposits hold funds for a certain period of time. They are the anchor for banks’ liquidity ratios, but funds must carry high interest rates to be tied up and held in deposits for a long time.

Therefore, when banks need liquidity, they offer high interest rates to raise funds for a long period of time. And this never happens in “good times”.

This happens during periods such as the 2015 bank crash, i.e. when financial institutions, in order not to be completely deprived of funds, were forced to raise rates on time deposits in order to have liquidity.

This is even worse than the current situation in Turkey. A typical example is Erdogan. What did he do? Offered a high interest rate on term deposits to keep the currency from falling.

It is reported that Turkish President Recep Tayyip Erdogan announced emergency measures to combat the collapse of the national currency, which fell in price by half. At the same time, the rescue plan is not about abandoning the policy of low rates, which, according to international experts, is the reason for this situation.

The head of state urged citizens to buy the Turkish lira and keep their savings in it, and not in dollars. He promised that in a few months inflation would begin to decline and the lira would rise. By that time, the population of the republic had already converted 60% of their savings into foreign currencies.

To support this practice, the Turkish government has changed the rules on deposits. Including the procedure for compensating bank customers for losses if their deposit rate does not cover the fall of the lira against the dollar.

It is worth noting that Greek investors looking for profit no longer wait for income from bank deposits, but actively purchase popular corporate bonds and actively support the shares of various companies in order to make a profit on the stock market.


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