The Greek banking systems loan-to-deposit ratio remains too high at 120% on the average. This will ensure continued pressure for the Banks to deleverage. On the other hand fiscal pressures and long-term structural inefficiencies will continue to weigh on recovery and growth. Hence restoring confidence in banks through recapitalization although necessary is not a sufficient condition for recovery. An investment shock through an exogenous inflow of new investment funds raised by political decision on a European level will be needed. This is the only necessary and sufficient condition to restart recovery and growth in the Greek economy. Same argument applies for all South European countries.
Posted on: Thu, 01 May 2014 08:27:00 +0000
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