Coene: No emergency liquidity for insolvent banks

The European Central Bank would not green-light emergency liquidity assistance (ELA) if Greece’s banks were to become insolvent, ECB Governing Council member Luc Coene has said.

?We do not provide ELA to insolvent banks,? Coene, who heads the Belgian National Bank, said in an interview with the Financial Times on Sunday. The assistance would ?absolutely? have to be terminated automatically, he said.

?That is one of the principles of the whole ELA policy,? Coene said. ?It is emergency liquidity assistance – not solvency assistance.?

Asked about debt-wracked Greece’s chances of remaining in the euro area, Coene said said it would be ?idea? if all euro area nations were to stick to the common currency, but that if a member state decided its best interests lay outside the bloc, then it could leave.

He said the main risk of a Greek withdrawal from the eurozone is contagion.

?There would be pressure on Europe’s firewalls, but they are sufficient for the moment and I am quite confident that if circumstances showed that more was needed, more would be there.?