ECONOMY

ECB says willing to restore financing for Greek banks once deal is reached

European Central Bank chief Mario Draghi said Thursday that the ECB is prepared to restore a key channel of financing for Greek banks once Athens reaches a debt deal with its eurozone partners.

“The ECB is the first to wish to restart lending to the Greek economy providing the conditions are in place,” Draghi told a news conference.

And one of the conditions was that Greece and its partners should put in place “a process which suggests successful completion of reviews,” he said.

Greek banks are dependent on the ECB for financing, but the eurozones central bank has said it no longer accepts Greek sovereign bonds as collateral for loans.

It had done so previously under a special waiver mechanism, but only as long as Greece continued to abide by the conditions of its bailout programme.

However, Athens’ new anti-austerity government under Prime Minister Alexis Tsipras was elected on his promise to renegotiate the tough bailout conditions.

And the ECB rescinded the waiver until a new deal was reached.

“Right now the ECB cannot buy Greek bonds,” Draghi said.

“If certain conditions are in place as far as economic policy is concerned, that would make the governing council think that in some time from now bonds would again be eligible,” Draghi said.

Without the waiver, Greek banks now rely solely on emergency liquidity assistance (ELA) which is more expensive than normal central bank refinancing operations.

[AFP]