ECB increases Greek bank funding

European Central Bank fulfills Greece’s request by offering further support through emergency liquidity assistance

Photo by: AFP
Photo by: AFP

Updated Jul 28, 2015

President of the European Central Bank (ECB) announced on Thursday that it will increase emergency liquidity assistance (ELA) to Greek banks by 900 million euros ($980 million).

This will allow Greek banks to reopen on July 20 but capital controls will have to remain to avoid a bank run.

"Liquidity provision according to our rules was never meant to be unlimited and unconditional," said ECB President Mario Draghi during a news conference.

The news came after the Greek parliament voted to accept new austerity measures to allow start of negotiations for a 86 billion euros bailout package from its European partners.

However, the deal did not come easy as the leftist Syriza-led government lost four ministers and a deputy minister as they objected to tough austerity demands, and Prime Minister Alexis Tsipras had to heavily rely on opposition support to pass to measures.

The Syriza party is now expected to reshuffle its ministers in cabinet

Greek Interior Minister Nikos Voutsis also noted that a snap election could be held in September or October, "depending on developments."

In order to secure a rise in ELA, Greece needed to ensure that it will make an obligatory payment of 3.5 billion euros including interest to the ECB on June 20.

“Things have changed now... we have accommodated the Bank of Greece’s request,” said Draghi.

Greece also has access to a temporary €7 billion loan from the European Union however, the basis of the loan will be determined by Friday.

The ECB president also said that the Greek crisis has revealed fragility of the eurozone and its need for further unification.

"This union is imperfect, and being imperfect is fragile, vulnerable and doesn't deliver ... deliver all the benefits that it could if it were to be completed. The future now should see decisive steps on further integration," he said.

Meanwhile, the ECB kept the interest rates unchanged, as expected, and Draghi said the central bank would fully implement its quantitative easing government bond-buying programme up to September 2016, in order to assist the economic recovery and help the eurozone reach its inflation target below 2 percent. He also assured that further action will be taken when needed.

Moreover, Turkey’s Energy Minister Taner Yildiz said on Thursday that Greece is expected to pay close to $100 million to Turkey after an international court ruled in favour of Turkey's state-owned pipeline corporation BOTAS, who was in a legal battle with Greece’s natural-gas company DEPA.

"We know that Greece is currently facing difficult times. We tried to help them but we have to prioritize our citizens and their needs," said Yildiz.

TRTWorld and agencies