A set of highly alarming predictions about the future of the Greek banking system were revealed today by the outgoing Parliament Budget Office head, Panagiotis Liargovas.
In an interview with Skai TV, the economist; whose term in the Parliament Budget Office has not been renewed by the government, claimed that if the foreclosed home auctions by the banks do not proceed, there is a strong possibility of a bail-in.
“If home auctions don’t proceed rapidly, Greek banks will be in dire need of recapitalization and that could lead to a potential haircut to individual deposits, according to data we have so far,” Liargovas said.
The issue of a bail-in (a deposits haircut used to recapitalize them) has not been discussed in the Greek bailout, although it was the solution proposed and implemented in the Cyprus crisis.
Liargovas said, that reforms postponed by the government in the past two years must finally be implemented if growth has any chance of returning to the country. “It will be very hard to see any growth with such high taxation – investment is the key,” he said.
“My fear,” he added, “is that the country will be trapped into a vicious circle of low growth and stagnation.”