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Provopoulos Met With Bankers

Greece’s Central Banker George Provopoulos Wednesday met with key executives from Greek banks with two main issues in the agenda.

The first was on the deteriorating international situation that has become apparent, and on how it will affect developments in the Greek economy.

It was noted that international developments will directly affect the behavior of the eurozone creditors regardless the implementation of the Greek consolidation programme.

The second issue on the agenda was the EUR25 billion guarantee scheme that Greek banks will have in their disposal under the ECBs mandate.
The new package is set to create a "cushion" concerning the liquidity of the banks as they have lost more than 20 billion in deposits. From the moment they entered the "bowl" of the Memorandum, their sole funder is the ECB through the Greek government guarantees and deposits.

Still, deposits have proved highly unstable, as the intensity of the crisis especially in the spring led to an outflow of around EUR21 billion.

A further deterioration of the situation is likely to cause similar reactions and that is why the support scheme was created.

Still, in order for the banks to receive these guarantees, they will have to pledge to structural reforms (mergers) to cope with new pressures.
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