Galery

1

In its monthly report, the German central bank, the Bundesbank, warns Greek banks not to use the emergency liquidity they are receiving through the Emergency Liquidity Assistance (ELA) to buy Greek state bonds. The Bundesbank thus indirectly rejects any possibility of financing the requirements of Greece through the European mechanism.

"The Greek banks that receive ELA should take steps to improve their liquidity position [...] Extending the liquidity requirements by taking short-term Greek state bonds in the coming weeks would run contrary to this," reads the report of the Bundesbank.

It must be recalled that the European Central Bank itself, as a supervisor of the European banking sector, has also advised the systemic Greek banks not to invest in Greek state bonds.

At the same time, Germany’s central bank points out that ELA is intended only for solvent banks with temporary liquidity problems. This can be interpreted as a warning that the support mechanism is not provided for an unlimited period.

The Governing Council of the European Central Bank will meet again on Wednesday to assess the provision of ELA to the Greek systemic banks. The emergency liquidity is provided by the Bank of Greece on its own risk, but the approval of the European Central Bank is required for amounts exceeding 2 billion euro.

According to sources, the European Central Bank has so far allowed the granting of up to 65 billion euro to the four largest Greek banks in order for them to deal with the serious outflow of deposits that has been observed since December.