Greece: Bank Gossips To Be Prosecuted

Greece’s chief central banker warned that anyone spreading false rumours regarding bank troubles could face charges by the public prosecutor, Greek media reported on Tuesday. Monetary authorities are concerned that rumours on the solvency of banks amid the global financial crisis may spark a run on deposits, hitting particularly smaller banks.

“When there is a named complaint for spreading false news I will report those responsible to the public prosecutor,” Bank of Greece Governor George Provopoulos was quoted as saying by financial website and Eleftheros Typos newspaper.

Provopoulos, also a member of the European Central Bank’s Governing Council, said last week that Greece’s banking system is sound and stable and does not face strains from exposure to toxic assets.

The web site said the central bank wants to put an end to the “rumour mill” regarding the safety of deposits. “Some are fishing in muddy waters,” Provopoulos was quoted as saying. “This cannot and must not continue.”

Last week Greece’s conservative government gave what it called a political commitment to guarantee all bank deposits. The country’s deposit guarantee fund (TEK) currently insures deposits for up to €20,000. TEK had assets of almost one billion euros last year. Based on central bank data, businesses and households had total deposits of €209bn in Greece’s banking system in July.

Source: Thomson Merger News