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Tough Tuesday for Greek banks

22 June 2015 / 15:06:38  GRReporter
1782 reads

The European Central Bank has decided to proceed to another increase of the Emergency Liquidity Assistance ELA ceiling on the funding to Greek banks, although the exact amount of the increase is not yet known. According to correspondent for the newspaper Financial Times Peter Spiegel, the amount is around 2 billion euro and the Governing Council will possibly meet tomorrow and grant new aid, if required.

To recall that last Wednesday the European Central Bank increased the ELA ceiling by 1.1 billion euro to 84.1 billion euro and on Friday by a further 1.8 billion euro.

Operating bank officials express before the newspaper Kathimerini restrained optimism that finally, after several difficult months, some kind of agreement will be reached today that will ease the fears of default or of exiting the euro zone. It is believed that if an agreement is reached, deposit flight will stop the next day and even the opposite process will start, namely depositing of small amounts that will increase if the economy stabilizes, as happened in 2012 after the two rounds of elections.

Today banks again expect a significant withdrawal of deposits, however hoping that it will not exceed specific controlled levels and no events that can lead to panic will follow it. It is also noted that banks received on Friday multiple requests for withdrawal of deposits today, but according to them, the sum of 1 billion euro mentioned by foreign media has nothing to do with reality. The withdrawal of deposits has been significant over the past few days due to fears of a rupture with creditors.

Following the sending of the new, improved proposals of the Greek side last night, the atmosphere is considerably more positive today, which is evident in the statements of European leaders and the publications of major foreign media. Improving the climate is largely neutralizing the fears and according to senior bank officials, there was no unusually high tension in bank branches at the start of the working day today.

As to the likelihood of another failure today, banks stress that such a development must be avoided at all costs. They believe that if no agreement is reached today or if there is no real prospect of agreement at least, then it is very likely for the European Central Bank to suspend the ELA funding to Greek banks, as happened in Cyprus.

Tags: European Central BankEmergency Liquidity Assistance ELAAgreement
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