BackECB said to leave Greek-bank emergency liquidity unchanged
The decision not to raise the level of Emergency Liquidity Assistance, or ELA, comes as deposit outflows have slowed, one of the people said
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Brussels: The European Central Bank left the level of emergency cash available to Greek banks unchanged for a third day on Friday, people familiar with the decision said.
The decision not to raise the level of Emergency Liquidity Assistance, or ELA, comes as deposit outflows have slowed, one of the people said. They asked not to be named as ELA decisions are not public.
The ECB Governing Council started revising ELA on a daily basis on Monday as negotiations between Greece and its creditors over the country’s bailout package accelerated. Euro-area finance ministers will reconvene on Saturday in Brussels after talks failed to make progress on Thursday and positions hardened.
A Bank of Greece official said the ECB’s decision in the call on Friday was in line with the Greek request. The ECB stands ready to review the liquidity situation of Greek lenders in the next 24 hours, if it is needed, the official said, asking not to be named, as the discussions aren’t public.
The ECB raised the cap on emergency liquidity to €87.8 billion ($98 billion) on Monday and raised it again to below €89 billion on Tuesday, one of the people said. The level has been left unchanged in daily calls since Wednesday.
Greek bank deposits by businesses and households fell to €129.9 billion in May from €133.7 billion the month before, according to data released by Bank of Greece on its website on Thursday.
With Greece cut off from global markets, the country’s financial system depends on central-bank liquidity to replace deposits withdrawn amid the political uncertainty over the country’s place in the euro. Greek banks’ capital levels and collateral values rely heavily on state guarantees on their assets, meaning a looming default automatically casts a shadow over their creditworthiness. Bloomberg
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