Despite a deadlock between Greece and international lenders, the European Central Bank is expected to continue providing emergency funding for beleaguered Greek banks.
The ECB’s Governing Council meets on Feb. 18 and will review the provision of so-called Emergency Liquidity Assistance (ELA) to Greek banks which have seen more than 15 billion euros in outflows this year with anxious depositors yanking their money fearing that Greece could be forced out of the Eurozone if there isn’t a settlement.
Without access to the ECB cash the Greek banks could go under even though previous governments injected them with almost 50 billion euros from 240 billion euros ($272 billion) in two bailouts from the Troika of the European Union-International Monetary Fund-European Central Bank.
The ECB stopped accepting Greek bonds as collateral for funding on Feb. 5, shifting the burden of financing its lenders via ELA to Greece’s central bank. However, the ECB retains control over that ELA funding, which is subject to tight conditions.
The rules stipulate that national central banks can only grant such funding temporarily and to solvent banks.
“There is no sudden end of ELA expected this week,” the person familiar with the situation said.
The ECB raised the cap on ELA for Greek banks by about 5 billion euros ($5.70 billion) to 65 billion euros last week, Greek central bank and government officials told Reuters.
The ECB added money because deposit outflows had picked up and to ensure Greek banks have liquidity while tense talks take place in Brussels, Greek banking sources said..
One banking source said recent daily outflows were in the region of 300 million to 500 million euros on average.