After four years, the capital controls in Greece have finally been lifted. It is worth noting that the ground for such a development had been laid by the previous government and was implemented by the current one.
The period after the lifting of capital controls will be accompanied in the medium term by more capital inflows than by outflows, market players predict, arguing that both the country’s lower risk and the negative interest rates in most Eurozone countries attest to that.
It is worth noting that in the first seven months of 2019, bank deposits have increased by slightly over EUR 4 billion.
Beyond that, the yield of the ten-year Greek government bonds fell from 4% -4.5% to below 2%, and in this climate it is expected that the removal of capital controls will be a positive psychological factor. As such, some Greek savers abroad might be persuaded to bring their savings back to Greek banks.
Similar behavior is expected to be shown by private savers and businesses, which have since the beginning of the year uploaded their deposits to Greek banks. In fact, this trend is much higher than it appears on numbers and papers. In particular, during the first half of the decade, large companies rushed to use the ceiling on their credit lines, borrowing large sums, which were then deposited abroad. In this way, they not only had assured liquidity in the event that banks stopped new lending, but could at the same time continue their operations smoothly in the event of capital controls.
Businesses have been gradually repatriating overseas money for the past 1.5 years, limiting their bank lending./ibna