Historical-review

The Bank of Greece starts operations

The Bank of Greece commenced operations in May 1928 with a staff of 500. Soon thereafter, the Bank set up a number of branches and agencies across the country, whose operations referred mainly to the provision of cash to meet local market needs, as well as cash transactions on behalf of the Greek government.

Soon thereafter, the Bank set up a number of branches and agencies across the country, whose operations referred mainly to the provision of cash to meet local market needs, as well as cash transactions on behalf of the Greek government.

The newly founded central bank took up certain assets (mainly gold and government bonds) and liabilities (banknotes issued and government deposits) from the National Bank of Greece.

According to Article 4 of the original Statute of the Bank of Greece, “the first duty of the Bank shall be to ensure that the gold value of its notes remains stable. To this end, it shall exercise, within the limits of its Statute, control over currency and credit in Greece.”

1928

The Bank moves to its home

On 4 April 1938, the Bank inaugurated its head office building at 21, Eleftheriou Venizelou (Panepistimiou) Street. Until 1938, the Bank was housed in the building of the National Mortgage Bank at 28, Eleftheriou Venizelou (Panepistimiou) Street.

On 4 April 1938, the Bank inaugurated its head office building at 21, Eleftheriou Venizelou (Panepistimiou) Street. Until 1938, the Bank was housed in the building of the National Mortgage Bank on 28, Eleftheriou Venizelou (Panepistimiou) Street.

The Bank’s head office building (6,025 m2), located in the heart of Athens, is a typical example of academicism inpublic architecture in interwar Greece.

The foundations of the Bank’s Head Office were laid on 20 November 1933. Governor Emmanuel Tsouderos, after an old Greek custom, placed into the foundations a glass jar containing ancient coins from various periods and regions of Greece (from Knossos, Crete, to ancient Macedonia), including an Athenian coin depicting the goddess Athena, whose image also features on the emblem of the Bank, as well as a gold Byzantine coin depicting Saints Constantine and Helen, a traditional gift for good luck to newborn babies.

Echoing the Governor’s gesture, a wall mosaic was later placed in a small chapel opposite the entrance to the Bank’s main vault. The mosaic was made by the Italian artist Amadeo Madellaro, based on the work bypainter Aginor Asteriadis entitled “Saint Constantine and Saint Helen”.

After World War II, the building was initially expanded towards Omirou and Edouardou Lo Streets and later, in the 1970s, to Stadiou Street, thus covering the entire block. A fifth floor was added in 1982.

In 1989, the building was listed as a historic monument by the Ministry of Culture.

1938

Rescuing the Bank's gold reserves

During World War II, the Governor of the Bank followed the Greek Government into exile. The Bank’s gold reserves were secretly transported from Athens to Crete and then to Egypt and finally to South Africa. Novelist Elias Venezis, who worked at the Bank from 1930 to 1957, describes this daring operation in his book Chronicle of the Bank of Greece (1955).

The end of the War found the economy and the financial system in chaos, and the hyperinflation had wiped out pre-war savings and eroded the value of the drachma. This critical situation called for close cooperation between the central bank and the government was deemed necessary. As the official body for such cooperation, the Currency Committee was set up in 1946. It comprised the Minister of National Economy as chairman, four other Ministers and the Governor of the Bank of Greece. Within the Committee, the Bank of Greece played an important role, as it was responsible for designing and recommending policy measures that were, as a rule, approved by the Committee.

1941 -1945

The Banking Supervision Department is set up

The Banking Supervision Department was established with the mandate to exercise supervision and control over commercial banks.

1953

The School of Banking Studies is founded by Governor Zolotas

During the 1950s, Governor Xenophon Zolotas founded a School of Banking Studies at the Bank of Greece, offering, a two-year course. He also established the Economic Research Department and granted scholarships to economists employed by the Bank for postgraduate studies abroad.

1957

The Currency Committee is abolished, and its tasks are transferred to the Bank of Greece

In 1982, 36 years after its establishment, the Currency Committee was abolished and most of its tasks were transferred to the Bank of Greece ( under Law 1266/1982).

Nevertheless, the complicated system of direct controls and credit regulation remained in place, with repeated modifications, through to the late 1980s. A twin-peak approach was adopted, whereby the government was responsible for theoverall economic policies, and the Bank of Greece for monetary and exchange rate policies within the limits set by its Statute.

In 1982, 36 years after its establishment, the Currency Committee was abolished and most of its tasks were transferred to the Bank of Greece ( under Law 1266/1982).

Nevertheless, the complicated system of direct controls and credit regulation remained in place, with repeated modifications, through to the late 1980s. A twin-peak approach was adopted, whereby the government was responsible for theoverall economic policies, and the Bank of Greece for monetary and exchange rate policies within the limits set by its Statute.

The role of the Bank of Greece changed again in the late 1980s, as part of the process of financial deregulation.

1982

Central bank independence is institutionally enshrined

By the decisions of the General Meeting of Shareholders of the Bank of Greece of 22.12.1997 and of 25.4.2000, ratified by Laws 2609/1998 and 2832/2000, respectively, the Statute of the Bank of Greece was amended, to ensure compatibility with the Treaty on European Union.

The amended legal framework explicitly stated price stability as the Bank’s primary objective, enshrined its independence and specified its relations with the Greek Parliament and the government.

As part of the amendments, a new body was established within the Bank of Greece, the Monetary Policy Council, responsible for monetary policy and exchange rate policy.

1997

Changeover to the euro

The year 2000 was a milestone in the economic history of modern Greece; the EU Summit of June of that year confirmed that Greece had met the convergence criteria for joining the euro area as from 1 January 2001.

On 1 January 2001, the Bank of Greece became an integral part of the Eurosystem, which comprises the European Central Bank (ECB) and the national central banks of the EU Member States that have adopted the euro. Since then, the Bank of Greece contributes to the achievement of the objectives and the performance of the tasks of the Eurosystem, which formulates and implements the monetary policy of the euro area.

2000-2001

Euro cash changeover

On 1 January 2002, euro banknotes and coins were introduced in twelve countries with a total population of 308 million.

It was the world’s largest cash changeover ever. It involved the banking sector, professional cash handlers, retailers, the automated teller machine industry and the general public.

On 1 January 2002, euro banknotes and coins were introduced in twelve countries with a total population of 308 million.

It was the world’s largest cash changeover ever. It involved the banking sector, professional cash handlers, retailers, the automated teller machine industry and the general public.

The changeover was completed in two months. The national banknotes and coins ceased to be legal tender at the end of February 2002, and the withdrawal of drachmas was completed successfully.

Euro banknotes and coins were frontloaded to 3,233 branches of commercial banks and Hellenic Post. The circulation of euro banknotes and coins and the parallel withdrawal of drachmas started on 1 January 2002. The period during which the Bank of Greece and tax authorities exchanged drachma coins for euro ended on 1 March 2004, while the period during which the Bank of Greece exchanged drachma banknotes for euro ended on 1 March 2012.

2002

First emergency shipment of euro banknotes

On 10 June 2010, the Bank of Greece received the first emergency shipment of 15 million euro banknotes, in a €100 denomination, from the national central bank of Italy. This was followed by another two emergency shipments of €50 banknotes, from the national central bank of Austria.

During the crisis, the Bank of Greece ensured the uninterrupted funding of the banking system through the Emergency Liquidity Assistance (ELA) mechanism and supplied credit institutions with sufficient quantities of euro banknotes, averting any cash shortages even in the remotest parts of the country.

Furthermore, the Bank provided timely and reliable information to the government and political parties, while informing public opinion through its reports and communication.

It thus helped to minimise the impact of capital controls, by mitigating their negative consequences for the economy.

The Bank also made a crucial contribution to the restructuring of the banking sector and the recapitalisation of banks without any shock to the financial system, which remained resilient, even at times of heightened uncertainty and without any depositor losing a single euro.

In this manner, the Bank of Greece acted as a safety net for the Greek economy and as an anchor to the European family.

2010

Historical review