ECONOMY

ECB reassesses local banks’ cash flow

ecb-reassesses-local-banks-cash-flow

The governing council of the European Central Bank will reconvene on Wednesday to examine the liquidity situation at Greek banks and Greek authorities’ request for an extension in the limit of emergency liquidity assistance (ELA).

After Monday’s decision to increase the haircut on local lenders’ collateral, bank officials estimate that Frankfurt will wait for the eurozone’s political decisions regarding Greece’s future before embarking on its next steps.

The ECB has kept the ELA limit unchanged since late June, before the government imposed capital controls.

Government officials argue that the banks’ cash machines could continue to operate with a 60-euro daily limit on withdrawals up to this Friday. Bank officials note that ATM operations could be extended for a few more days if the limit were to be brought down to 20 or 30 euros per day.

Originally, it had been estimated that the liquidity reserves would suffice up to the start of this week, but the operation of the cash machines has been extended thanks to the decision not to pay retirees’ full pensions.