Greek market is on the verge of a credit crunch as liquidity is close to drying up and banks are paying dearly to hold on to deposits, as daily Kathimerini reports today. Bank of Greece data on the course of interest rates in October showed the average rate of deferred accounts was 4.50%, while the benchmark rate of the European Central Bank stands at 1.25% and the three-month Euribor is at 1.4%. In the last couple of years, BoG suggested, the cost of money has more than doubled, from 2.10% in 2009.
Greece’s average rate is the second highest in the eurozone after Portugal’s (4.57%) and ahead of Cyprus (4.15%). However, while Portuguese account holders are showing confidence in their banking system, Greeks are continuing to withdraw deposits that now add up to less than 180 billion euros, against 244 billion in December 2009. Loan rates have also soared, as they have climbed from 4.70% at the end of 2009 to 6.85% in October for loans of up to 1 million euros.
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