ECONOMY

ECB expected to extend ELA funding on Wednesday

Wednesday’s meeting of the European Central Bank’s board is not expected to bring any nasty surprises for Greece in regard to the expected renewal of liquidity to Greek lenders via the Emergency Liquidity Assistance (ELA) mechanism of the Bank of Greece.

Bank officials estimate that Frankfurt will continue to approve the flow of credit to local banks, though they make no secret of their concern over whether the clash between Athens and its eurozone partners could test the balances within ECB.

Domestic lenders expect the ECB not only to renew ELA approval but also to raise its limit from the current 65 billion euros. Last week, the ECB raised the ceiling by 5.5 billion euros to allow banks to deal with their pressing cash needs: Deposit outflows since early November have exceeded 20 billion euros and in recent days Greek bank accounts are bleeding at a rate of 300-500 million euros per day.

Tuesday’s announcement by Prime Minister Alexis Tsipras of plans to present Parliament with new reforms may stoke tensions with the country’s creditors and has caused concern in the credit sector, but bank officials have noted that the ECB would be the last to take any action that would jeopardize the cohesion of the eurozone.