Cyprus Mail
Greece

ECB raises emergency funding for Greek banks (Updated)

It appears that a deal to keep Greece in the eurozone has been finally reached

The European Central Bank increased its funding lifeline to Greece’s banks again on Tuesday, sources with direct knowledge of the decision said, allowing the country’s banks to stay open as Athens inches towards a deal with creditors.

The latest increase amounted to “a bit less than one billion euros,” one of the people told Reuters. This raises the value of the ECB’s Emergency Liquidity Assistance (ELA) programme to around 89 billion euros ($100 billion).

“This is following the positive signal from the leaders’ summit meeting,” the person said. Two further sources confirmed that the limit had been increased.

The move, which is the third day in a row that the ECB has sanctioned additional funding, follows Athens’ presentation on Monday of new budget proposals that euro zone leaders welcomed as the basis for possible agreement.

However, Greek lawmakers reacted angrily on Tuesday, with parliament’s deputy speaker saying the government’s proposals would struggle to win approval from the legislature.

With nervous Greek savers and firms withdrawing billions of euros in cash from their accounts, the country’s banks are almost entirely dependant on central bank funding to avoid collapse and potentially dragging down the country with them.

The latest increase in ELA provides some breathing space as Greece’s Prime Minister Alexis Tsipras seeks to clinch a formal deal with euro zone backers.

If a concrete agreement is reached and there is a euro zone commitment to provide more funding, the ECB could also loosen restrictions that limit Greece’s ability to sell and fund itself with short-term debt.

Here is a SUMMARY OF THE GREEK PROPOSALS

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