ECONOMY

ECB’s Nowotny: Greek banks can go back to usual funding in case of bailout deal

Greek banks can return to normal European Central Bank (ECB) funding mechanisms if there is a new agreement on the country’s debt pile but a lack of an agreement would not automatically close the door to emergency funding, ECB Governing Council member Ewald Nowotny said on Thursday.

Nowotny told Reuters on the sidelines of a seminar in Prague that emergency funding called ELA, now in place, would be decided upon periodically, with the next decision due at the ECB’s next governing council meeting.

Asked if a lack of agreement would cut of the ELA program automatically, leaving Greek banks in a liquidity shortage, he said: “No, definitely not.”

“We all expect there will be … a solution, it makes no sense to speculate (now),” he said.

“I think if there is the new agreement then I think we would be able to return to the old system, because the old system was under the condition of having an active program in place.”

[Reuters]