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Bundesbank urges Greek banks not to buy short-term state debt

[FRANKFURT] Germany's Bundesbank urged Greek banks receiving emergency funding to improve their liquidity positions and not buy short-term Greek government debt, in a monthly report published by the central bank on Monday.

German central bank officials said that the Emergency Liquidity Assistance (ELA), which is now being used by Greek banks, was for "solvent banks with temporary liquidity problems".

"The Greek banks that receive ELA should take steps to improve their liquidity position," the report said.

"Extending the liquidity requirements by taking short-term Greek state bonds in the coming weeks would run contrary to this."

Germany's central bank, in the same report, also said that German economic growth this year could be stronger than current forecasts, signalling that it could upgrade its official projections.

"Given the brighter overall economic picture, it follows that growth in Germany in the current year could be noticeably higher than the forecasts that were concluded in autumn of last year."