The restrictions (ceilings) that have been put on Greek banks since 2015 on the amount of Greek bonds they can buy are immediately removed. Building on the good track record of the economy and a few weeks after the Mitsotakis-Lagarde meeting in Frankfurt, Finance Minister Christos Staikouras rushed for the first time to publicly announce that the European Central Bank's lending limits were imminent.
“It seems that this or next month there will be a lifting of restrictions on the banking system to draw on Greek bonds. This will strengthen the banking system with liquidity, “Mr. Staikouras said in the” House of Representatives “show with Alexia Koulouri.
Lenders and barriers to the market of Greek government securities by domestic banks had set lenders as early as 2012 and the “haircut” of Greek bonds (PSI) until the crisis of 2015 and Greece's exclusion from quantitative easing. And this in order to avoid debt transfer from the state to the banking sector.
As of 2015 at least the Greek bond holdings threshold for the Greek system is up to 12 billion euros. In order to obtain Greek bonds the domestic banks would first have to sell corresponding bonds that they had from old. They were essentially excluded from any market for Greek bonds, old and new.
Even with a long delay, however, the benefits of lifting bank bans on Greek bond purchases are numerous and significant. But mainly:
– Greek banks will now be able to invest in Greek bonds that offer higher interest rates and positive yields (at least for the time being) than German or other eurozone counterparts. This would also enable Greek banks to have interest rates that, until now, only foreign banks could access. And this enhances the banking and financial stability in our country, as it gives way to a time when almost everything is pressing for Greek banks (red loans, auctions, zero or negative interest rates, empty deposit accounts, etc.).
– By bringing Greek banks back into the Greek bond market, they will increase their preferred investment base and subsequent government securities issuance is expected to fall at even lower interest rates. In practice, the interest rate curve of Greek bonds is expected to improve further, resulting in less pressure for high surpluses or additional fiscal space for tax breaks or other benefits.
The Minister of Finance also underlined that “at present there is an extension of the program of quantitative easing. We will try, by improving the image of the Greek economy, by upgrading the Greek economy, to create the conditions for the European Central Bank to join us in the program of quantitative easing. “
The coronavirus … “ally” for a reduction in primary surpluses
Although straightforward, there is probably yet another reason why Athens will seek to relax its primary surpluses after 2020: the coronavirus!
But as Mr Staikouras said, “if we are confronted with uncertain factors or risks such as the Coronation that will hit the global economy, they will have to take into account the Greek economy as well as the country's goals. Because this is beyond and beyond the powers of any Greek government, of any Ministry of Finance, ”the Greek Minister of Finance stressed.