With no end to the Greek economic crisis and the fear of bank collapse, wary Greeks have been withdrawing cash for years although there has been no wild bank run. The rich have pulled their money out of local banks and moved them abroad while the average folk withdrew their assets and stash them under a mattress.
Now, some of the money stashed under a mattress is finding its way back to the economy, according to recent reports. This is the only way to explain the reappearance of bills in the largest denominations (100, 200 and 500 euro bills).
This is also an indication of the severity of liquidity constraints facing households in Greece after seven years of ongoing recession. With unemployment at 25% and over 50% for young people (15-24), wages and salaries having dropped to levels encountered in nearby Balkan nations like Bulgaria, and nearly half of pensioners receiving benefits below the poverty line, it is a wonder if the working people in Greece have any savings left.
Long live the euro, long live austerity!