ECONOMY

ECB, BoG see no reason for further ELA extension

The banking market is showing signs of returning to normal, at least on the crucial deposits front, as bank clients appeared calmer the last couple of days at the prospect of an agreement between the government and its creditors.

The European Central Bank examined conditions in the domestic credit sector in a teleconference on Wednesday and decided against further extending the limit of cash available to local banks via emergency liquidity assistance (ELA) from the Bank of Greece, according to sources, given also that the country’s central bank had not asked for another extension deeming that it was not necessary.

Notably, the ECB has changed its tactics, as it has allowed the safety cushion to drop below the original 3 billion euros, and is monitoring the situation on a daily basis, releasing only the necessary amount of liquidity.

Bankers said Tuesday saw a 50-million-euro increase in deposits, but that this was only due to pensions being paid into accounts. Without them, the daily outflow would have amounted to 200 million euros, which is still low compared with the withdrawals seen in previous days. On Wednesday the picture was said to be even better.