Greek Banks Offer Incentives for Deposits

Euros(Greece) – Greek banks are offering higher interest rates to their customers in order to encourage people to make more deposits. Now that the capital controls that the Greek government has imposed on the banks have been lifted somewhat, the banks are hoping to bring more money back to the banks through these deposits. Last year, Greeks withdraw around 4o billion euros total since November 2014 as the government was facing the possibility of being forced to exit the Euro Zone. However, last month the government eased back on some of the restrictions and raised withdrawal limits on cash that has been redeposited into the banks.

The capital controls were put in place in June of 2015 to help prevent the massive withdrawals from causing the economy to crash completely. This massive amount of withdrawals caused the banks to not have as much cash available and this caused them to to obtain funding through the Central Bank. Greeks who were able to withdraw money typically hoarded it in their homes or in safety deposit boxes. Some of them even sent the money overseas. The banks are hoping that the people will feel encouraged by the higher interest rates to make the deposits.

An account officer at Alpha Bank, Vasili Balaska, said that, “We offer 1.3 per cent on a six-month time deposit, the rate is higher than the 0.8 per cent rate that existing accounts earn for a similar period. The entire amount of fresh cash deposited can be withdrawn, it is not subject to capital controls.”

However, there are some rules that are attached with making these deposits. Greeks are prohibited from opening new accounts. Instead, they need to deposit the money into their old accounts and then explain why the withdrew the money on the first place. An anonymous personal lender said that, “One cannot walk into a bank with 50,000 euros in cash and expect us to accept it without questions. It helps if they can provide withdrawal slips, showing the money was pulled out during the crisis.” However, the high interest rates are expected to encourage people to make deposits, despite this.

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