AFTER three weeks of closure the reopening of Greek banks on July 20th was a positive step. But the banks remain enfeebled; a liquidity crisis has turned into a solvency crisis. Until worries about their viability are quelled after the summer, when stress tests to determine their capital adequacy will be held, they will struggle to get back to some semblance of normality.
Although the shutters have gone up and there are no longer queues at ATMs, little has changed in practice this week. Customers can pay in cheques and gain access to safe-deposit boxes in banks where they have stashed cash. However, strict capital controls still prevent transfers abroad and the existing limit on cash withdrawals remains in place, with only a cosmetic change from the previous daily cap of €60 ($65) to a weekly limit of €420.
Yet the position could have been far worse. After eking out a limited amount of cash over three weeks, the banks were close to running out altogether. What made the difference was the decision by the European Central Bank (ECB) on July 16th to raise the amount of emergency liquidity...
from The Economist: Finance and economics http://ift.tt/1gQbjaF
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