The European Central Bank (ECB) is threatening to cut off funding to Greek banks in the hope that this drastic measure won’t actually be necessary, Bloomberg news agency reports.
In an article titled “The politics behind the ECB’s threat to cut Greece’s funding” the agency notes that ECB has made its position clear through the statements of its President Mario Draghi, who has warned Greece that “No program means no guarantee of cash from us.”
This tactic was also used in the Irish and Cypriot stages of the debt crisis, where the risk of losing central-bank funds forced politicians to take immediate action, says the article.
Amid main opposition SYRIZA promises of anti-austerity measures ahead of the general elections on January 25, the European Central Bank is demonstrating its willingness to withdraw 30 billion euros of finance, even if this means that Greece will have to exit the euro zone, says Bloomberg.
Greek banks have received so far 45 billion euros of funding and, based on Finance Minister Gikas Hardouvelis’s estimates, about two-thirds of that sum would have to be replaced if the ECB ceases to accept Greece’s government debt as collateral in its refinancing operations.
