- Greek, Spanish savings flee eurozone crisis!
By COLLEEN BARRY, DAVID McHUGH, NICHOLAS PAPHITIS, AP
ATHENS, Greece — In Europe’s most economically stricken countries, people are taking their money out of banks as a way to protect their savings from the growing financial storm.
People are worried that their savings could be devalued if their country stops using the euro, or that banks are on the verge of collapse and that governments cannot make good on deposit insurance. So in Greece, Spain and beyond they are withdrawing euros by the billions — behavior that is magnifying their countries’ financial stresses.
The money is being hoarded at home or deposited in banks in more stable economies. It’s a steady bank “jog” at the moment, not a full-bore run. But it threatens to undermine the finances of those countries’ already-stressed lenders. And if it does turn into a full bank run after Greece’s crucial election on Sunday, it could hasten financial disaster in Europe and help spread turmoil around the world.
Since the Greek debt crisis broke in late 2009, deposits have fallen by 30 percent. Savers have slowly pulled some €72 billion ($90.24 billion) from local lenders, with total household and corporate deposits standing at €165.9 billion ($207.94 billion) in April, according to the latest data from the Bank of Greece.
Spanish deposits have fallen about six percent over the past year. They dipped suddenly in April by about €3.1 billion, or 1.8 percent, to €1.624 trillion as problems with the country’s troubled banks started to grow to alarming proportions. This is despite the fact that deposits are guaranteed by the government up to €100,000 across the eurozone.