The Greek banking system only began facing liquidity constraints when the severe fiscal imbalances led to successive downgradings of the country’s credit rating – and consequently the credit ratings of Greek banks, thereby restricting their access to international capital markets. Meanwhile, the slowdown in deposit growth, due inter alia to the recession, affected the domestic supply of credit.
It is worth noting that, in spite of these problems, the annual rate of credit expansion to the private sector remained positive throughout 2009, contrary to the situation in the euro area as a whole, where there have also been periods of negative credit growth rates.