• ECB will not increase liquidity lifeline to Greek banks

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    ATHENS: The European Central Bank’s governing council on Wednesday (Thursday in Manila) decided not to increase the liquidity lifeline to cash-strapped Greek banks,
    a Greek banking source said.

    The bank is “ready to intervene as and when necessary,” the source said, adding that “no other decision was taken” at the ECB meeting.

    The decision means the bank is keeping open its Emergency Liquidity Assistance (ELA) program for Greece, but the amount of emergency funding the country’s banks can access will remain frozen at around 89 billion euros ($99.1 billion).

    It was the ECB’s decision on Sunday to refuse to increase emergency funding for Greek banks that pushed Athens to keep its banks closed for a week and limit cash withdrawals to 60 euros per day.

    Wednesday’s meeting was the Frankfurt-based bank’s first since bailout talks between Athens and its international lenders collapsed at the weekend and the government announced a referendum on creditors’ latest cash-for-reform proposals.

    The debt crisis deepened on Tuesday when Greece’s international bailout officially expired and the country failed to make a key IMF debt payment, becoming the first industrialized nation to do so and heightening fears Greece was headed for a eurozone exit.

    The ELA program was originally intended as a lifeline for solvent lenders that get into a cash jam, but has become a tool to keep the entire Greek economy alive as Athens its creditors wrangle over a new debt deal.

    AFP

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