The ECB will increase emergency funding for Greek banks – Onet.pl

The Management Board of the European Central Bank made a decision on the matter after the teleconference, having established that banks need more support, because the Greeks massively withdraw from their savings in fear of the collapse of the system.

In late April, after the informal Eurogroup summit in Riga, which like all the previous did not bring any breakthrough in negotiations with Athens, the head of the ECB. Mario Draghi, however, said that “the ECB will provide emergency financial assistance (ie. ELA – emergency liquidity assistance) so long as Greek banks are solvent and keep financial reserves.”

Credit ELA are of fundamental importance for the Greek banking system, whose liquidity is threatened by capital flight caused by the massive withdrawal of deposits. Without this weekly financial drip from the ECB Greek banks in danger of losing liquidity, and Greece re inability to borrow money on the markets.

Greek banks are solvent thanks to 75.4 billion euros, the ECB has provided to them under the ELA program; However, as recently reported a source in the Bank, its management is becoming more critical mood for this loan.

How did the AP, a run on the banks is the most serious of the many threats faced by Greece. Therefore, more and more often speculated that because of how much prolong the negotiations and how far uncertain is the future of the country will panic Greeks withdraw their savings on a large scale, regardless of whether the government reaches agreement with creditors, or not.

Therefore, the government may introduce monitoring of capital flows to prevent Runowo on banks. Especially now that they are in a deplorable state, and according to the latest available data – in April – the level of deposits reached its lowest level in more than a decade.

If Greece does not come to terms quickly with the lenders and does not receive aid, immediate danger of insolvency. From the end of June expires rescue program for the country.

Athens must also, within that period to repay the loan installments granted by the International Monetary Fund – a total of 1.6 billion euros. The head of the IMF, Christine Lagarde, warned on Friday that Greece will not receive the deferment of repayment up to a month. “Money is payable on June 30,” – she pointed out.