The capital controls imposed on Greek banks three weeks ago may be in place for months until the country’s European partners provide fresh money to the banks. According to Reuters, the rehabilitation process for Greek banks could continue for months.
“Rehabilitating the country’s banks poses a difficult question. Should the Eurozone take a stake in the lenders, first requiring bondholders and even big depositors to shoulder a loss or should the bill for fixing the banks instead be added to Greece’s debt mountain?” wondered the news agency. However, this is a question that could potentially hold up the negotiations regarding the country’s third bailout program.
Meanwhile, the longer the negotiations take, the worse the banks’ condition, while the 420-euro weekly limit on cash withdrawals is damaging the economy.
“This cash ‘freeze’ is unlikely to thaw soon, although capital controls may be slightly softened, such as the loosening on Friday of restrictions on foreign transfers by businesses,” noted Reuters.
“We want, if possible, an initial amount to be ready for the first needs of the banks,” a Greek Finance Ministry official told Reuters. “That should be about 10 billion euros.”
BOJ’s Nakaso calls for swift Greek bank recapitalization
Bank of Japan (BOJ) Deputy Governor Hiroshi Nakaso said on Monday that Europe should recapitalize Greek banks in order to maintain the economic stability in the Eurozone.
“The situation surrounding Greece remains highly uncertain,” he said. “It is very important that Greek banks lacking capital are quickly recapitalized … I say this from the precious lessons Japan learned from its past banking crisis.”
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