Bank of Greece released its balance sheet data for July today. The most important development is that, following the corresponding ECB decision to not accept Greek government collateral in its refinancing operations, ‘Other claims’ (ELA) grew from €61.95bn to €106.32bn, while regular financing decreased from €73.66bn to €24bn. This is a change of €49.66bn which is much higher than the Greek banks government bond holdings (which are accounted as held-to-maturity on Greek bank statistics releases while ECB repo lending uses market values, hence it would only allow borrowing close to 20% of par value). A possible scenario is that Greek banks were also using government guarantees as collateral (which should be around €85bn in total) making most of their ECB lending government-backed.
A positive development was the fact that total liabilities towards the Eurosystem dropped from €128.27bn to €123.91bn. Nevertheless, most of the decrease came from liabilities related to banknotes, while liabilities towards Target2 only decreased by €0.95bn. Structural confidence to the Greek economy (expressed by the Target2 deficit) did not change significantly, only temporary customer psychology which drove people to move banknotes held at homes back to bank vaults. As a result, the risk of a major accident did not decrease significantly.
General government deposits decreased further to €3.69bn (from €4.25bn in June) highlighting the difficult fiscal situation for the Greek government.