Photo: flickr / James.Stringer
Irish banks have lost 40% of their deposits over the past 18 months, whereas Greek banks have lost 19%.(Without thinking I almost inserted a ‘just’ in front of the Greek figure, but 19% is still a significant number!)
Right now the risk is much greater for Greece than Ireland of either leaving or getting kicked out of the euro, followed by:
- Declaring a bank holiday
- Enacting capital controls
- Restricting Shengen and imposing limitations on travel, reducing the amount of money which can be taken out of the country per visit, or both
- And then devaluing the new currency by approximately 50%
Naturally, one would expect deposit withdrawals to be much higher in Greece than Ireland, but according to official statistics the opposite is the case.
“Deposits by financial institutions in Greek banks, which make up 21 per cent of the total, have fallen by one-third since the beginning of 2010, while those by non-financial firms and residents dropped 9 per cent, according to Bank of Greece data.
People “are now afraid of the possibility of returning to the drachma,” said Giannoulis, referring to the Greek currency in circulation before the country adopted the euro in 2001. “Just a headline is enough to spook depositors.””
Something doesn’t smell right here. If Greek depositors were really afraid of returning to the drachma then they’d be pulling euros out en masse and stashing them under the mattress or opening bank accounts in other countries.
Continue reading the full article here.
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