The European Central Bank’s governing council was due to meet on Monday evening after Greece called for a raising of a liquidity lifeline to keep its own banks afloat.
The Emergency Liquidity Assistance – a drip feed of short-term loans – has been keeping the Greek economy from collapse for the past 5 months.
Having raised the ELA facility four times since April, it, the EBC faced a difficult choice of whether to increase it again, said analysts.
No imminent bailout deal exists any more and last week Athens defaulted on a payment to the International Monetary Fund.
Robert Halver, capital markets analyst at Baader Bank thought European banking chiefs wouldn’t over-react.
“The ECB will continue to play its cards close to its chest. It won’t raise its level of emergency credit any more – they can’t reduce it, but they can’t add any more to it, because that would then be covert state financing and the ECB is not there to be an alternative funding source instead of the creditors,” he said.
Some analysts think that as Greece moves towards total default and an exit from the eurozone, the ECB will be hard pressed to class Greek banks as eligible for emergency assistance.
Without the ECB lifeline, Greek banks will struggle to honour customer withdrawals in euros.
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