ECB Tells Greece Funding Access Depends on Bailout Review

Greek banks’ access to European Central Bank funding beyond February will depend on Athens successfully completing a final bailout review and reaching a deal on a follow-up plan with its EU/IMF lenders, the ECB said on Thursday.

The statement was the clearest warning yet that Athens cannot expect to rely on ECB funding if it reneges on its obligations under the 240 billion euro bailout program, the prospect of which has grown as Greece prepares for snap polls.

Opinion polls show leftist party Syriza poised to win the Jan. 25 election. The party has promised to cancel the austerity terms of the bailout and demand a renegotiation of debt.

Hammered by the country’s prolonged economic crisis, Greek banks have reduced their exposure to ECB funding in recent months but still depend on the central bank for liquidity.

The ECB has helped out Greek banks by exempting them from requirements on the collateral it accepts for access to funding.

“The continuation of the waiver is based on the technical extension of the European Financial Stability Facility program until the end of February 2015 and the existence of an International Monetary Fund program,” an ECB spokesperson said in a statement.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza