The European Central Bank expanded emergency funding to keep Greece’s stricken banks on their feet as a steady flow of withdrawals continued on Friday ahead of a summit next week that could decide whether the country can stay in the euro.
With pressure on Greece’s fragile banking system growing daily, the ECB held a teleconference and raised the cap on so-called emergency liquidity assistance, which the banks rely on to keep operating, by 1.8 billion euros, Greek officials said.
That should be enough to keep the system running until euro zone leaders meet on Monday night in a last-ditch effort to reach an aid-for-reforms deal with Athens.
As the country edged closer to a possible default at the end of the month, leftist Prime Minister Alexis Tsipras assured Greeks that prophets of “crisis and terror” would be confounded, and his government would strike a deal with European Union and IMF creditors.
However, European Council President Donald Tusk said no one should assume that the emergency summit of euro zone leaders he will chair on Monday evening would find a “magic solution”.
“The game of chicken needs to end, and so does the blame game. Because this is not a game and there is no time for any games,” Tusk said.
Greek officials said Tsipras, who returns from a visit to Russia on Saturday, would spend the weekend preparing Greece’s position at the summit but the pressure on his government is coming at least as much from the banks as from the lenders.
Withdrawals have picked up to reach about 4.2 billion euros this week, with some 1.2 billion euros pulled out on Friday alone as dire headlines accelerated the run, bankers said.
“Today was a more difficult day compared to yesterday,” one banker said. “Monday will likely be tough as well.”
Officials said the ECB would review the ELA emergency liquidity limit again on Monday night after the emergency summit in Brussels, with the prospect looming of capital controls being imposed on Greek banks if the situation continues to worsen.
Greece is on course to default on a 1.6 billion euro debt repayment it must make to the International Monetary Fund on June 30 unless the creditors resume funding.
Tsipras nevertheless exuded confidence and calm, going ahead with a planned meeting with Russian President Vladimir Putin on the sidelines of an economic conference in St Petersburg.
source : Reuters
