ECONOMY

ECB raises ELA limit by 700 mln euros

Greek banks received a cash lifeline of just 700 million euros from the European Central Bank on Wednesday as this is the estimated amount of liquidity needed by the local credit system for one week given the outflow of some 3 billion euros during March.

The ECB decided on Wednesday to raise the 71.1-billion-euro limit that Greek lenders can tap in emergency liquidity assistance (ELA) via the Bank of Greece to 71.8 billion euros, as the pressure on the local system remains constant.

Greek bank sources expect the flight of deposits to continue in the coming weeks due to the prolonged economic uncertainty and contradictory statements by Greek and European officials, some of which have gone as far as talking of a rift between Athens and its creditors.

The 3-billion-euro drop in deposits last month came on top of the 24 billion euros removed from bank accounts in the period from December to February. Therefore it is estimated that from the high of 237 billion euros in December 2009, deposits shrank to about 137.5 billion euros at end-March owing to problems in the government’s negotiations with its creditors and the cash crunch in the country’s economy.