ECB Raises Emergency Funding To Greek Banks

ECB chief Mario Draghi.
ECB chief Mario Draghi.

ECB chief Mario Draghi.

The European Central Bank decided Thursday to boost emergency funding for Greek banks after lawmakers in Athens passed a bailout-for-reforms deal, ECB chief Mario Draghi said. “We decided today to raise Emergency Liquidity Assistance (ELA),” which has been fixed at around 89 billion euros since late June, Draghi told a news conference, adding that financial lifeline’s ceiling would be increased by 900 million euros. The increase corresponded to the amount requested by the Bank of Greece, Draghi said. “We substantially accommodated the request put forward by the Bank of Greece, recalibrated over one week, so the increase will be 900 million euros over one week,” Draghi said. The ELA facility has been the life support system for the Greek economy for weeks. But strictly speaking, it is only available for banks that are solvent. And following the massive capital flight- and the subsequent capital controls to try to stem it- the solvency of Greek banks was looking increasingly shaky. Athens has already failed to make a key debt repayment to the International Monetary Fund, and it must now stump up 4.2 billion euros to the ECB itself by July 20. Should it miss that deadline, the ECB may find it impossible to justify keeping the ELA taps open, which could lead to Greece crashing out of the single currency. But Draghi was adamant that Athens would repay it’s debt to both the ECB and the IMF. “On July 20, we will be repaid,” Draghi said.

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Chukwunonso Azinge is a Public health parasitologist whose variety of intrests ranges from international news reportage, writing articles on current world issues and of course football. Follow me on Twitter @azingelfc and on Facebook- Nonso 'King Kenny' Azinge.

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