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Greece

ECB seen keeping reduced lifeline for Greek banks after vote – sources

One person said in advance of the referendum result that a 'no' vote would prompt no immediate action with regards to the provision of funding

European Central Bank policy setters are likely to maintain emergency funding for Greek banks at its current restricted level, people familiar with the matter said on Sunday, following Greece’s rejection in a referendum of bailout conditions.

Such a move would give Greek banks little time before they use up all of the roughly 89 billion euros of funding available and ensure that they remain closed for at least the coming days.

But it would avoid the drastic option of withdrawing existing support, a measure that would trigger their immediate collapse.

Although no final decision has been taken and the matter will be the subject of debate when ECB policy setters talk on Monday, they are likely to decide to maintain Emergency Liquidity Assistance (ELA) at its current level, the people said.

One person said in advance of the referendum result that a ‘no’ vote would prompt no immediate action with regards to the provision of funding while a second person confirmed that the referendum would not trigger a change.

The central bankers are also set to discuss increasing the haircut or discount that values the security Greek banks offer in return for funding.

This may, however, be a largely symbolic step to show that they are reacting to the situation, without curbing banks’ access to funds.

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