Greece cannot rely on ECB to dodge funding crunch, Draghi says

Greece cannot rely on the European Central Bank to raise a limit on Athens’ issuance of short-term debt, ECB President Mario Draghi suggested on Thursday.

He also said the rules meant the ECB could not buy Greek bonds under its new asset-buying programme.

Asked about the short-term debt limit at a news conference following the ECB’s meeting in Cyprus, Draghi said that the bank was prohibited by European rules from direct or indirect financing of governments.

“The ECB is a rule-based institution. It is not a political institution,” Draghi said.

Athens is running out of options to fund itself despite striking a deal with the eurozone in February to extend its bailout by four months. Faced with a fall in revenues, it is expected to run out of cash by the end of March, maybe sooner.

One funding option would be to raise a 15-billion-euro ($16.69 billion) cap on Athens’ issuance of Treasury bills, or short-term debt. The cap has already been reached, and the ECB has a veto over lifting it.

The cap is sensitive because Greek banks have used the T-bills to access central bank funding and then invest in more T-bills, helping the state cover its short-term needs.