Greece to Inject About $3Bln Into Banking System by Easing Capital Controls

MOSCOW (Sputnik) — On Monday, the indebted country's EU and IMF creditors approved the relaxation of capital controls imposed in June 2015, when Greece defaulted on nearly $2 billion of its debt and the government attempted to prevent a bank run and a credit system collapse. The proposed relaxation includes lifting the ban on early loan repayment, increasing cash withdrawal limits and raising the limit on remittances.

Banks that are seeking to attract new money in the form of deposits previously kept out of the credit system by Greeks, expect to attract between two and three billion euros, the Kathimerini newspaper reported.

However, much more time is required to bring the total mass of 30 billion euros, currently circulating outside the bounds of the credit system, to be deposited back into the banks, officials say, according to the publication. It is estimated that cash will start returning from early 2017, provided that the economy rebounds and capital controls are relaxed further.

Following the 2015 partial default, Greece eventually agreed to the third bailout program with its European creditors, under which it was obliged to implement complex economic austerity measures. The country ended the year with a step back into recession. In June, the Bank of Greece said that the recession was likely to continue but the economy would rebound in the second half of the year as the country was due to receive the latest tranche of the bailout package agreed in May.