The real economy has only seen a small part of the injection of liquidity given by the European Central Bank to the Greek credit sector to combat the impact of the pandemic.
Although they drew up to 40 billion euros from the Eurosystem, the banks channeled only part of it into loans to the market. Instead, they invest most of these resources in government bonds, with the aim of safeguarding fragile profits.
Another part of their cash – in the absence of sustainable companies that could absorb it – is parked at the ECB in the form of available liquidity. In the first nine months of the year, Greek lenders invested a total of nearly € 35 billion in the purchase of government securities and the reduction of borrowing in the interbank market, as well as in deposits. with the central bank.
Thus, most of the liquidity circulates around the ECB, national governments and commercial banks, in a vicious circle that is maintained by all parties concerned: banks unable to take new risks under the weight of bad debts; the country’s businesses, which have low credit capacity due to their size and low competitiveness; and the state, which recycles policies of questionable effectiveness and incapable of forming a coherent growth strategy.
The problem is acute in Greece after the decade-long financial crisis, even though the expansion of business credit rose 8.5% in January-September, the highest level since 2010.
The absolute figure of 5 billion euros is very low and comes mainly from loans issued with state guarantees from the Hellenic Development Bank and thanks to the leverage effect of commercial lenders. In any event, it is well below the funds drawn from the Eurosystem.
Data from the Bank of Greece shows that a significant portion of liquidity in the credit system is spent on purchases of government bonds. The bond portfolio held by banks rose from less than 29.7 billion euros at the end of 2019 to more than 40.8 billion euros at the end of last September, an increase of almost 11.2 billion euros in just nine months.
