Greeks fearing collapse of eurozone bailout pulled record sums from bank

From The Guardian UK: http://www.guardian.co.uk/business/2011/dec/16/greeks-fearing-collapse-of-eurozone-bailout-pulled-record-sums-from-bank

Bank of Greece reveals that investors fearful of political instability and economic collapse pulled €12.3bn from local banks as Papandreou referendum threatened debt deal

in Athens
guardian.co.uk
, Friday 16 December 2011

An unprecedented exodus of capital from Greece – peaking in a record number of withdrawals from banks in recent months – has exacerbated the liquidity crisis now wracking the recession-hit country.

The latest figures released by the Bank of Greece reveal that in September and October alone investors pulled €12.3bn (£10.3bn) from domestic banks, spurred by fears of political uncertainty and economic collapse.

Overall, outflows have reached a record 25% since September 2009 – when household and corporate deposits stood at a peak of €237.5bn, the data showed.

Theodore Pelagidis, an economics professor at the University of Piraeus, said: “This is part of the death spiral of the recession as a result of austerity measures. People realise that contagion has come to banks and they are very afraid of losing their deposits. On average around €4bn-€5bn in capital flees the banking system every month.”

The extraordinary figures back up anecdotal evidence that it is not just the super-rich behind the flight of funds.

Over the past year, as the eurozone debt crisis has intensified in the nation where it largely began, there have been countless cases of ordinary depositors hauling suitcases stuffed with cash to the safer destinations of Cyprus, London and Switzerland.

Continue reading at:   http://www.guardian.co.uk/business/2011/dec/16/greeks-fearing-collapse-of-eurozone-bailout-pulled-record-sums-from-bank

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