ECB gives € 1.8 billion in additional emergency support to Greek banks – Financieele Dagblad (Registration)

The banks in Greece get another € 1.8 billion in additional emergency aid, reports Reuters. A spokesman for the ECB did not comment

The Governing Council of the ECB -. The governors of the national central banks plus the nineteen six members of the ECB board – have met this afternoon by telephone. Greek banks are kept afloat with money from the ECB. And there should be more money in

ELA

Emergency Liquidity Assistance (ELA) is the official name of the billions in emergency aid that keeps the Greek banks are still standing. Now the Greeks receive massive money, commercial banks threaten to come under pressure. Because the commercial banks simply have too little money to meet demand. So they rely on ELA extra liquidity from the Greek central bank. With the promise of today, the ELA-counter, which in February is going to run, at € 85.9 billion.

The Bank of Greece, the ECB must ask for permission to extend the emergency. The ECB decides every Wednesday about it: there is a conference call where Draghi, Knot and the president of the Bank of Greece, Yannis Stournaras, participate

Bankrun

Benoît Coeuré, board member of the ECB, according to Thursday evening, sources have told the finance ministers in the euro zone that he was not sure whether the Greek banks on Monday open. “Then you ask more or less a bank run,” said economist Aline Schuiling from ABN Amro. “That’s why this morning also inserted an additional ECB meeting. A temporary solution was to come.

Monday was a new euro summit on Greece. Schuilingstraat expects a temporary solution will roll out over there. “No new package, but an agreement that the summer can be bridged.”

Stress

Wednesday it was decided that Greek banks get another € 1.1 billion in emergency aid. But that was not enough, last week, Greek account holders already recorded some € 4 billion. Today there is a new decision, and again an increase. It is an indication of the enormous stress is exposed to the country, emergency aid after two days to be raised again.

When the ELA would not be increased and the emergency window was so close behind, then commercial banks had fallen. That would cause a banking crisis, a shockwave through the markets. Because if banks have no more money, then the chaos – economic, social and humanitarian. The ECB will want to do anything to prevent it.

On the other hand it is not a structural solution. ELA is emergency aid, and therefore a temporary solution. In fact, it is a bridge loan for banks that are healthy to the core, but experiencing a momentary liquidity problem. At this time, Greek banks are kept afloat by ELA. Every week there is something in. And that can not indefinitely go well.