Banks collect ECB funds without channeling them to the economy

Greece’s four systemic banks (National, Piraeus, Eurobank and Alpha) received over 3.2 billion euros from the European Central Bank last month, in the context of the favorable monetary measures Frankfurt is applying. However, those funds have not been channeled into the local economy, Bank of Greece data show.

In the first couple of months of 2021 the net amount of credit Greek enterprises received was just €104 million, while for the entire private sector the net credit flow was negative by €243 million, which means that banks have collected more debt servicing funds that the new loans disbursed. 

After the increased funds that flowed into Greek banks’ coffers from the ECB in March, their total exposure to Frankfurt has come to €44.6 billion, from €41.4 billion at end-February; this capital that lenders borrow from the ECB come with a negative interest in the context of the ECB’s Targeted Long-Term Refinancing Operations (TLTROs).