Wednesday, February 18, 2015

Greece faces resistance to extra emergency funds for banks

February 17, 2015

The European Central Bank faces resistance from Germany to allowing any extra emergency lending for Greek banks, people familiar with the matter said, increasing pressure on Athens to sign up to an extended aid-for-reform programme.

After talks between Greece and euro zone creditors broke down acrimoniously on Monday, the ECB's policymaking governing council will review on Wednesday how far the country may support its weak banks, which face rising deposit outflows.

While the ECB is unlikely to lower the ceiling on emergency lending assistance (ELA) by the Greek central bank, a refusal to increase it would nonetheless be bad news for Greek banks, which are close to using up the full 65 billion euros granted so far.

Bundesbank chief Jens Weidmann, who has warned against the misuse of the emergency funding to indirectly finance the Greek state, is set to stick to this stance at the ECB meeting, the sources said. Some other governors have similar reservations.


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