Since the governor of the Bank of Greece asserted that almost €20bn in deposits have returned to the Greek banking system, I ‘d like to take a brief look at recent deposit developments, based on the relevant BoG statistics.

If one takes a closer look at deposits breakdown the data show that, since June 2012:

  • Government deposits have increased by €8.8bn, mainly due to inflows from the EFSF loans.
  • Domestic private sector deposits have increased by €13.5bn.
  • Non domestic residents deposits fell €6.5bn (almost €4bn since January).

Using the ‘liabilities to the Eurosystem due to banknotes’ component of the monthly BoG financial statement the result is that almost €10bn   of the increase in private deposits can be attributed to a reduction in banknotes held by the general public. As a result, it seems that only limited actual deposits inflows from abroad have happened, which were negated by the outflow of deposits of non residents. All in all, since June 2012 total deposits grew €15.9bn, a bit less than the effect of EFSF loans and lower banknotes demand combined.

Although Greek households have returned ‘vault cash’ back to banks, the same does not seem to have happened to deposits held abroad. Since current ‘excess’ banknotes are close to €12.4bn, any reduction in Eurosystem liabilities for the Greek banking system in the future will be limited.

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