Meanwhile, some money appears to be simply hoarded at home, despite the risk of theft. Last month, police in Athens arrested a gang that specialized in breaking into basement storage spaces under apartment blocks, netting a rich haul in stashed cash and valuables.
“What the average Greek has in mind is to secure the euros they currently hold,” Attica Wealth Management managing director Theodore Krintas said. “That has been going on for a long time, and will continue as long as the uncertainty increases concerning Greece’s position in the near future in the eurozone and the European Union.”
Since 2010, Greece has been dependent on two bailouts totaling 240 billion euros in loans to pay its bills. In return, the government had to promise to make deep spending cuts to lower its deficit. That has helped put the country in a deep recession. Leading political figures have called for renegotiating or rejecting the bailout deal, which could lead to a payment cutoff from mistrustful eurozone governments and the IMF.
A bailout cutoff could lead to a complete collapse of government finances and a euro exit, so the country will have to print its own money to pay bills or recapitalize banks.
A large-scale bank run in Greece could further wreck government finances and push the country closer to leaving the euro. The country could either quit the single currency to introduce a devalued currency that would improve its economic competitiveness, or because it has no choice but to print its own currency to recapitalize banks or pay government salaries.
So far, it has been a trickle rather than a flood in Greece, underlining its slow-motion nature. Many people have kept their deposits, because they do not believe Greece will leave the euro.
It is not just in the financially troubled countries that savers are worried. Wealthy Germans are concerned that inflation will surge if Europe’s central bank has to step in and spend huge amounts of money propping up the single currency. So they are putting more money into their own country’s high-end real estate in hopes their investment will keep its value.
Well-heeled Spaniards have been moving money to Switzerland and the US for months amid mounting worries about Spain and the safety of the eurozone, K2 Intelligence managing director for Europe, the Middle East and Africa Bruce Goslin said.
“We’re not money managers, but we deal a lot with clients who are looking for intelligence,” Goslin said. “As we are circulating and talking to people, some things are becoming clear. Everyone says: ‘There is nothing going on in Spain, the economy is contracting so fast we’re going to have to go out of Spain.’”
Spain’s banking problems come from the collapse of a real-estate boom. Banks that made reckless loans are not being paid back and are seeing the value of the properties they invested in tumbling. This is making the country’s banking system increasingly financially insecure — heightening savers’ fears that their money is not safe.