Before the major Euro crisis Greek banks were one of the strong elements in the economy. However; as the years have progress this has not been the case. Unfulfilled monetary and fiscal policies have led them to be the cornerstone of Greece’s financial crisis. Since the radical party Syriza won the election last year it has been a dodgy year in Greek politics. Deposits in the economy have swiftly depleted which has given rise to concerns that Greece might revert to the Drachma and denounce the Euro. This act would have a very negative impact on depositors.
For Greek bank, their woes continued to grow when the ECB denied further liquidity which forced the government to shut them down for three weeks in the summer ( capital controls were also put in place). However; the Greek government was able to receive a bailout and stay in the Euro. Although this may have solved the issue at hand for a short period of time, but; in reality it had a massive impact on Greek banks. The main issue that they are dealing with as of right now is that local depositors have lost confidence.This means that Greek banks rely heavily on international investors, however; that in itself is an issue considering the shaky nature of Greece’s future in the Euro zone.
1 comment:
It makes sense that Greek banks are continuing to fail. Germany and the ECB refuse to aid them in their time of need. The ECB has to review the four main banks in Greece to see if there is any hope. The banks need a 14.4 billion euro injection if they are to remain afloat.
Unfortunately the future is not looking bright for Greece and they may have to exit the euro zone, which won't impact the euro zone much but it is a scary thought for the Greeks. The economy is failing, with a 2.3% decline in GDP simply this year alone and Greece's reigning political party is not the strongest. So what can Greece do? Greece needs a steady inflow of investors/investments, and they need them yesterday.
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