Double challenge for local banks

The Greek credit system is faced with a double challenge in tackling the economic crisis caused by the coronavirus pandemic: Besides managing the new generation of bad loans, the banks will have to serve as the catalyst for the economy's emergence from the crisis, channeling the necessary cash flow into the market.

The instruments employed under the guidance of the regulatory authorities are strong and aim to tackle corporations' and households' inability to meet their obligations and cover increased liquidity needs, offering enterprises access to credit lines for working capital.

Topping the list of watchdogs' tools is flexibility in tackling the new bad loans that will be created by the freeze on loan repayments. That flexibility permits lenders to suspend payments for extensive periods, allowing them to put any new bad loans created into a separate category that...