Greek Banks will once again resort to borrowing from the Emergency Liquidity Assistance (ELA) mechanism as they are facing problems with liquidity and the need to enter an emergency liquidity support program has become more pressing.

According to information, two Greek banks are expected to apply for funding from ELA by the end of the week.

The banks’ decision to once again borrow through the ELA mechanism system means that the Greek banking system has returned to the conditions of 2012. Apart from increasing the cost of money, the Greek banks inclusion in ELA will also put the Bank of Greece at risk, as it will bear the cost that may arise from the provision of emergency liquidity.

This does not mean that the banks will automatically get the funding. The Board of the ECB may curtail the emergency liquidity operations via ELA if it decides – with 2/3 majority – that they hinder the objectives of the Eurosystem.