Greece Casts Shadow Over ECB’s Efforts

European Central Bank policymakers gathering on Wednesday will examine possible further emergency funding for Greece’s banks as they take stock of a wider economic picture showing early signs of improvement.  With falling prices in the euro zone beginning to stabilize, ECB President Mario Draghi will be able to claim an early success for the quantitative easing scheme — money printing to buy chiefly government bonds — launched by the bank in March.

The ECB’s borrowing rates are all but certain to be held at record lows, but continued wrangling between Greece and the euro zone over reforms and aid is casting a cloud of uncertainty over the 19-country currency bloc.  Athens has until the middle of this week to improve a package of reforms required for the release of euro zone loans that it needs to stay afloat.

Were Greece ultimately to tumble out of the euro, it would deal a blow to the credibility of the currency union. Athens was first bailed out almost five years ago by the euro zone with another aid deal in 2012 but its future remains uncertain.  “The euro crisis is not over. But the currency union is in a sweet spot, with a lower euro and oil prices helping the economy,” said UBS economist Martin Lueck.