This time last year Greek banks were in chaos. While the government took part in negotiations with its international creditors, capital controls were imposed amid fears the country would ditch the Euro currency.
This resulted in strict limits placed on how much money depositors could withdraw from their accounts each week.
Thirteen months on however, and the Greek central bank is easing its grip on those controls in a bid to encourage nationals to return some of the money withdrawn.
While some of that money was spent on paying taxes and covering household expenses, billions of dollars have been moved to accounts abroad, safe deposit boxes, and even under mattresses.
By lifting certain restrictions on cash withdrawals, Alternate Minister of Finance George Chouliarakis says he expects it will attract between three to four billion euros in fresh deposits, reports the Financial Times.
The move will be a critical test of the nation’s confidence in SYRIZA, with the reaction expected to demonstrate how safe Greeks feel about having their money in the country’s banks.
The decision comes after the government successfully completed the first review of its €86 billion bailout loan.
With certain controls expected to be abolished as soon as Monday, depositors will be permitted to withdraw €840 every two weeks rather than €420 every week.
One banker shared Chouliarakis’ sentiment stating, “we expect a fair amount of cash to emerge now from where it was stashed at the height of the crisis,” a fair expectation given that some €45 billion was withdrawn from the banking system in the first half of 2015 alone. They also added that it would give a much-needed boost to the system’s liquidity.
Despite the changes, other restrictions will remain in place on cash transactions for some time with the aim to encourage use of plastic cards in everyday transactions to reduce tax evasion.
“The overriding priority is to ensure that POS card machines are in use everywhere even for small transactions, not just supermarkets and food outlets but newspaper kiosks too,” a bank official said.