Greece received green light from the European Central Bank for the extension of emergency assistance for liquidity, but at a higher price. ECB decided to continue the program in the same framework, but cut collateral guarantees, which are used for bank liquidity.
According to analysts, this means that the limit of funds that banks may withdraw from emergency liquidity fund is decreased about two thirds. This decision is seen as a clear and direct message to the Greek government to reach an agreement at any cost at today’s meetings in Brussels. If no agreement is reached and the situation is not alleviated, with reduced amount of funds it has available now, Greek banks could face further operational problems, be unable to proceed with any transactions and be declared insolvent.
The newspaper “Kathimerini” reports the estimates of the banking sector that, with this decision, of 18 billion euro, which they had available until Monday, now the only have 5 billion euros.
The step of ECB is considered as an additional pressure to reach an agreement.
ECB Council will meet tomorrow as well to discuss the Greek situation after today’s meetings and decisions of the Eurogroup and the EU Summit. The assessments are that if no agreement is reached, it is possible even stricter measures by ECB to follow, which will further aggravate the situation of the Greek banking system.
Banks in Greece remain closed for transactions until Wednesday evening.
Queues before ATMs continue, citizens are waiting behind one another for their 60 euros at any time of day, whether early morning, at noon or midnight.
