ECB said to increase Greek ELA ceiling by 600 mln euros
The European Central Bank increased the maximum Emergency Liquidity Assistance that Greek banks can get from their national central bank by 600 million euros ($637 million), according to two people familiar with the decision.
The amount matches the request by the Greek central bank, said the people, who asked not to be named because the talks are private. The ECB’s Governing Council held a phone conference on Thursday to set the limit, which policy makers had increased by 500 million euros to 68.8 billion euros on March 5. The council is scheduled to review the level again on March 18.
Greek banks didn’t absorb all ELA funds available under the previous ceiling and have about 3.5 billion euros in liquidity left, said a Bank of Greece official, who asked not to be named because the matter is private.
The ECB is reviewing ELA weekly, reflecting concern that banks will use it to finance the Greek government and so violate European Union law. The newly elected administration in Athens is struggling to gain access to aid payments as a cash crunch looms before the end of the month.
“Where the government is unable to tap the market and where banks are unable to tap the market, in my view there are concerns about monetary financing if ELA is used to purchase treasury bills or to roll over treasury bills,” Bundesbank President Jens Weidmann said in a Bloomberg Television interview in Frankfurt after the decision.
An ECB spokeswoman declined to comment on the Governing Council’s phone conference.
The yield on three-year government debt fell to 17.69 percent at 4:23 p.m. Athens time. Greek bank stocks were gaining 1.1 percent, reversing earlier losses, while the benchmark Athens Stock Exchange gell 0.6 percent.
Greek banks were cut off from regular funding operations in February, forcing them into ELA. The ECB removed an exemption on the quality of debt it accepts as collateral, which was conditional on the country being on track to complete its aid program.
The government has argued that the austerity conditions of the program are hampering the economy’s recovery. Greece’s statistical agency said on Thursday that the country’s unemployment rate rose to 26.1 percent in the final quarter of 2014, from 25.5 percent in the prior three months.
[Bloomberg]
