With the loss of some 28 billion euros in yanked deposits since last October, Greek banks are hoping for more aid from the European Central Bank (ECB) which is considering pumping in more money.
The ECB’s Governing Council is holding its weekly review of their Emergency Liquidity Assistance, the funds keeping Greece afloat, unidentified sources told the Bloomberg news agency.
“Greece is being kept on an incredibly tight leash,” Michala Marcussen, global head of economics at Societe Generale said in a Bloomberg Television interview. It’s “clearly intended to keep Greece under pressure and keep things moving forward in the negotiations.”
He was referring to ongoing stalled talks between Greece and its international creditors, the troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which is holding back a 7.2-billion euro installment until the government implements more tough reforms it had vowed to reject.
ECB money is all that’s keeping Greece from going broke right now as tax revenues have also plummeted at the same time nervous depositors are taking out money as fast as they can.
The ECB council made more than 1 billion euros of additional ELA available last week, raising the limit to just over 71 billion euros. Dependence on the emergency cash has surged since the ECB in February stopped allowing Greek government bonds to be used as collateral for its regular funding operations and deposits plunged to their lowest in more than 10 years.
Prime Minister and Radical Left SYRIZA leader Alexis Tsipras has asked the ECB to be more lenient although he said before the Jan. 25 snap elections he won that he didn’t want to talk to the institution.
Greece also wants the ceiling lifted on how much it can sell in short-term treasury bills even though the interest rates are soaring as investors don’t trust the government to repay.
Greek bonds have delivered the worst returns this year of all 34 sovereign securities tracked by Bloomberg’s World Bond Indexes. Greek bank shares lost 41.5 percent of their value in the first quarter of 2015, which ended on March 31.