How messed up is Greece?
As Greek politicians and voters have been trying to figure out whether they need to implement austerity programs or not - including programs previously agreed to as part of a bailout package - the nation’s four largest banks almost depleted their capital bases.
On Monday, National Bank, Alpha, Eurobank and Piraeus Bank received an emergency injection of $22.6-billion (U.S.) to keep them afloat, Reuters is reporting.
The amount is staggering and the flow of funds complicated. They came via bonds from the European Financial Stability Facility rescue fund, after the money was transferred from the Hellenic Financial Stability Fund (HFSF). The HFSF was set up to channel funds from Greece’s bailout programme to its banks, Reuters explains.
The European Central Bank ceased providing liquidity to some Greek banks last week because of their dire financial state.
Reuters says that to date, Greek banks had borrowed 73.4-billion euros from the ECB and 54-billion euros from the Bank of Greece as of end-January. That amount represents 77 per cent of the banking system’s household and business deposits.
Now Greece itself is almost out of cash. It has just 3 billion euros left from its first bailout fund to cover basic government expenses. At the same time, government revenue has fallen more than 10 per cent this month, and officials have warned that Greece could be unable to pay salaries and pensions a month from now.
Greece’s second attempt to elect a national government occurs in about three weeks, so maybe Parliament will re-open in time to deal with the crisis.Report Typo/Error