The European Central Bank (ECB) approved an emergency funding line for Greek banks said sources on Wednesday. The Bank of Greece had asked for so-called emergency liquidity assistance (ELA) for Greece’s four systematic banks. According to sources, the request has been approved for two weeks or until the ECB’s next governing council meeting. An ECB source said that the ELA mechanism may be stretched to offer liquidity to Greek anks even after February 28, following the end of its current bailout program. This woul occur if banks are solvent and have the necessary collaterals.
The outflow of deposits from Greek banks moved at extremely high levels on Wednesday with approximately 1.8 billion euros withdrawn by depositors. The negative trend follows a similar outflow on Monday and Tuesday. Bankers had estimated that the outflow for the week prior to the national elections would have been 4.5 billion euros, however the total amount they had estimated has already left the system in just three days.
The exact outflow is gathered daily at 5.30 p.m. but is altered through e-banking. The estimated amount of withdrawals were at 1 billion euros on Monday, 1.4 billion euros on Tuesday and 1.8 billion euros on Wednesday.
The level of outflows from deposits has concerned bankers. Though banks have the funds to deal with it, ELA is considered necessary with estimations that the peak of the outflow has yet to be reached and is anticipated to come to a crescendo following the national elections on January 25.
Greek banks had borrowed as much as 120 billion euros from ELA early in 2012 but his number had been zeroed by mid-2014 after the ECB started accepted Greek bonds as collateral for the refinancing of its domestic financial institutions. ELA offers liquidity at a higher interest rate compared with liquidity offered directly from the ECB.
Ask me anything
Explore related questions