The downgrading of banks’ credit ratings, consequent on the downgrading of the country, meant that banks were shut out from the markets, while they also lost a significant proportion of deposits. Against this background and in order to meet their liquidity needs, banks had recourse to the liquidity support measures adopted by the Greek government including a State guarantee scheme.
Such measures had been adopted by all EU countries in 2008 at the height of the global financial crisis. It should be recalled that under this scheme the State, for a fee, guarantees debt securities issued by banks; it does not provide banks with cash.