New “Tiresias double” for public and bank debts – How will it work

Two new debt tracking systems come with it bill of the Ministry of Financewhich has been posted on opengov.gr for public consultation.

According to the provisions, the systems will collect all the information and assets of citizens who owe money to the government and banks so that their creditors have a complete picture of what they can claim and collect.

With the new system, the solvency and creditworthiness of natural and legal persons vis-à-vis the State will be assessed and a Independent Credit Rating Authority, i.e. according to the standards of today’s Teiresias with the aim of “sanitizing” the private debt of the citizens. In addition, a Central Credit Registrywhich will be created at the Bank of Greece and will record on a detailed basis the payment history of each individual loan granted.

See the bill in detail here.

Specifically:

The purpose is to address the problem of asymmetric information between public sector entities and private entities regarding the creditworthiness of natural and legal persons through the their credit scoring in relation to their debts to the State. The ultimate goal is to prevent the increase of non-performing and overdue debts to public and private entities and to prevent the over-indebtedness of natural and legal persons.

To measure the effectiveness of the present, they are used as key indicators, three years in depth from launch of the Independent Credit Assessment Authority, in accordance with article 107 par. 12, on the one hand the number of credit ratings per year and on the other hand the percentage of objections per year. The quantitative targets for the above indicators are set to increase by ten percent (10%) per year in the number of credit ratings and the corresponding reduction by one percent (1%) per year of objections.

Basic Credit Scoring Settings

1. A credit rating system is established to assess the creditworthiness of natural and legal persons based on financial behavior data related to debts to the public sector.
2. Competent for the production and granting of the credit rating is the Independent Credit Rating Authority established by article 64.
3. For the exercise of the above competence, an integrated information system is organized for the processing of the economic behavior data collected from the records of the public sector entities.
4. The credit rating is produced and granted for use by the data subject of economic behavior and public and private sector bodies.

CONSTITUTION AND OPERATION OF THE INDEPENDENT CERTIFICATE ASSESSMENT AUTHORITY

An Independent Authority without legal personality is established under the name “Independent Credit Rating Authority” (hereinafter the “Authority”).

The mission of the Authority is the production of credit ratings through the System, the maintenance of a relevant database and the exchange of credit ratings and information with credit rating agencies, with the aim of reducing the levels of non-performing exposures and overdue debts to public bodies and private creditors, as well as to prevent the phenomenon of overindebtedness of individuals.

Powers of the Authority

1. The Authority has, in particular, the following powers:
a) the comprehensive management of the System and the observance of the relevant financial behavior database,
b) the collection, storage and processing of economic behavior data of economic behavior data subjects originating from public sector bodies,
c) the extraction of credit rating of the data subjects of financial behavior,
d) the exchange of credit rating data subjects of economic behavior with credit rating agencies in accordance with par. 2 of article 58, or the provision of credit rating to private sector agencies in accordance with article 56,
e) the preparation of economic analyzes and statistical studies based on the economic behavior data kept by the Authority,
f) the statistical processing of historical data with the aim of predicting as accurately as possible the probability of default of each natural or legal person, both towards the State and social security bodies and towards private creditors,
g) the participation and representation of the country in international organizations and in the European Union, as well as cooperation on a bilateral level with corresponding bodies of other states for the exchange of economic behavior data, the preparation, undertaking and implementation of programs and projects, the exchange of best practices and receiving technical assistance for issues related to the Authority’s mission,
h) the planning and implementation of informative seminars and awareness-raising programs on issues related to the Authority’s mission.

ESTABLISHMENT AND OPERATION OF A CENTRAL CREDIT REGISTRY

Purpose is establishment and operation Central Credit Registrywith the aim of strengthening the financing by the Greek financial system of the real economy and ensuring financial stability, through the improvement of the information provided, the more rational assessment of the creditworthiness of potential borrowers and the general assistance in making informed financing decisions.

The Register allows the automated collection and further processing of financial behavior data from individual creditors and the export of the Credit Report for individuals and legal entities. It functions as a database of credit and financial institutions in general and as a hub for forwarding this data. It interoperates and exchanges information, which does not allow the identification of data subjects of financial behavior, with databases of the public sector or private sector entities or credit rating agencies, as well as with any other electronic system of a public or other entity or with competent services for the provision of information in the context of preparing economic analyzes or statistical studies based on the data it keeps.

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