You are here
Greece unlikely to ask for more ECB liquidity for weeks
[FRANKFURT] Greece is unlikely to ask for an increase in emergency funding from the European Central Bank for weeks, because its liquidity buffer has risen thanks to cash inflows and central bank help, two sources familiar with the situation told Reuters.
The bank liquidity buffer has grown to about 5 billion euros from 1 billion to 2 billion euros at the height of Greece's debt crisis, thanks to two Emergency Liquidity Assistance (ELA) increases from the ECB, tax and tourism inflows, and pension payments, said one of the sources, who asked not to be named.
Greek banks, closed for much of July, rely on emergency liquidity from the ECB and limit cash withdrawals to 420 euros per week to prevent a run on banks.
The capital controls have stopped the exodus of cash. And the increase in the buffer indicates that money is leaving banks slower than feared and they retain at least some confidence.
"There's been relative little outflows and there was actually a week in July when there was a net inflow into the banks," one source said.
Another source close to the process added: "There is an adequate liquidity buffer, there is no reason to ask for an increase in the ELA cap."
The ECB increased ELA to Greek banks twice in July by 900 million euros each time and ELA is now capped at around 91 billion euros, of which about 5 billion is unused.
The ECB is due to discuss ELA again on Wednesday, when the governing council holds a non-policy meeting. Last week, Greece did not ask for an increase, a sign the banks were stabilising.
The Greek stock exchange, which reopened on Monday after being closed for five weeks, tumbled in early trade. Banking shares, which make up about 20 per cent of the Greece index, were particularly hard hit, with the banking index down 30 per cent limit.
Greece's top banks include National Bank of Greece , Eurobank, Alpha Bank and Piraeus Bank.