Athens Digest 31.12.2018

• Greece must use tools deployed in Spain, Italy to tackle NPLs, says Bruegel deputy director

• Protection to main residences of indebted Greeks extended by two months

• Auction of EUR 1.25bn worth of T-bills on Wednesday

# The great risk for the Greek economy that needs to be resolved domestically is the issue of the banks, according to the deputy director at the Bruegel think tank Maria Demertzi. Speaking to Athens Digest’s John Papageorgiou, she said Greece must “use tools that have been used, for example, in Spain, and are now being used in Italy with comparative success.” She stressed that the focus must be on reforming banks and reducing NPLs so that banks regain their real role in the economy as development finance lenders. “This should be the first priority for the new year,” Demertzi said, adding that there are solutions that use both the markets and the role of the state, which can help up to a certain point. At least in the current cycle, Demertzi noted, the solution cannot be a European one as the NPL problem must be resolved domestically first. “There are of course strict rules in Europe that must be adhered to but there are commercial solutions that could help Greece.”

# The protection afforded to the primary residences of indebted Greeks by the so-called Katseli law which expires today, has been extended by two months following a meeting on Friday between Hellenic Bank Association Chairman Nikos Karamouzis and Prime Minister Alexis Tsipras. The PM’s office said in a press release that the decision was made to allow time to create the new necessary framework for the protection of the primary residence and a bankruptcy law for private individuals. Karamouzis said both sides want to find solutions and that talks are on the right path.

# Greece Public Debt Management Agency has announced the auction on Wednesday of six-month Treasury bills of the Greek Government amounting to EUR 1.25 billion and ending July 5, 2019. The settlement date will be Friday, January 4. The interest is calculated on an ACT / 360 basis.

On Our Radar: Former PM Simitis says EU expects Greece to knock on ESM door again
Greece’s former socialist Prime Minister Costas Simitis said yesterday that “”within the EU it is considered as certain that Greece will resort to ESM lending again after 2018.” In an interview to the Sunday edition of To Vima newspaper, Simitis said that an inevitable consequence will be the imposition of new terms on the Greek government’s economic policy. His claim was dismissed by ruling Syriza, whose spokesperson cited the course of the economy and the statements of European officials.

Happy New Year!
The next Athens Digest will be available on January 2