Greek bank liquidity ‘under control,’ central banker says

Greece’s central bank chief said Thursday the country’s banks will not face a liquidity shortage, despite fears of a brewing clash with the EU that could push the country out of the eurozone.

“There is absolutely no problem. We are completely in control,” Bank of Greece governor Yannis Stournaras told reporters as finance ministers in Brussels debated a Greek demand for a six-month loan assistance.

Greece’s recently elected anti-austerity government wants a new deal with its European creditors that will enable it to address sweeping poverty in the country.

However, several eurozone countries led by Germany want Athens to complete unpopular reforms stemming from its ongoing bailout package.

Analysts have warned that if a deal is not reached by the end of the month, Greece could find itself without European support and soon go bankrupt.

According to Goldman Sachs, Greek depositors have withdrawn some 18 billion euros from banks since December.

The ECB this week raised emergency liquidity assistance available to Greek banks but only by a small amount, a move interpreted as designed to pressure Athens and its European partners into reaching a deal.

“The ECB’s position is basically connected to what happens in the Eurogroup. We are here to prevent accidents,” said Stournaras, following a meeting with Deputy Prime Minister Giannis Dragasakis.

“We will do everything in our power to safeguard and strengthen monetary and financial stability in our country,” Dragasakis said.

He added that the Greek public had reacted in a “cool and admirable” manner to reports of an imminent bank run.

On the negotiations in Brussels, Dragasakis said Greece has sought “to understand the sensitivities of other European countries and institutions, and I believe today’s (loan request) condenses the work done in recent days.” [AFP]