The banking system plays a very important role in the smooth functioning of the economy. Its main role is to direct savings deposited in banks toward borrowers who have productive uses. The basic function of the banking system, therefore, is to act as an intermediary between savers and investors, providing returns to savers and capital to borrowers.
This section presents several aspects of the operation of the Greek financial system.
The main way in which banks interact with the economy is that they receive deposits and they make loans. The graph presents the evolution of bank deposits and bank loans.
The key prices that banks offer are the interest rate that they offer to depositors and the interest rate that they charge for their loans. The graph shows the evolution of these two interest rates for new deposits and new loans as well as the associated bank margin.
The size of the banking system can be measured by the total assets that banks hold (e.g. loans, bonds, etc.), or its capital base. The next graph shows the evolution of banks' assets and capital.