ECB Raises Emergency Funding Cap for Greek Banks

The European Central Bank (ECB) has raised the funding cap on its Emergency Liquidity Assistance (ELA) for Greece’s banks, according to a CNBC source.

The decision, made in a conference call Friday and first reported by Reuters, followed a meeting of the euro zone’s finance ministers on Thursday, where the ability of the country’s lenders to open up for business next week was questioned.
It comes as a specter of a run on Greek banks is looming, after yet another round of failed rescue-for-reforms talks.

The valuation of the Greek banking sector has fallen by nearly a third since the start of June as concerns about the risk of Greece leaving the euro zone grow.

On Friday morning, banks were open in Athens city center and there seemed to be a steady stream of people making withdrawals at ATMs, as observed by CNBC. The mood appeared calm and there weren’t any lines forming; it was difficult to judge whether the banks were any busier than usual on a Friday morning.

Of course, measuring ATM queues doesn’t take into account the number of people transferring money in other ways. Also, Greece is still an economy where many of the transactions that are done via credit cards in other Western countries are regularly done in cash.

Yannis Stournaras, governor of the Bank of Greece, Greece’s central bank, said on Friday that he “confirms the stability of the banking system.”

There are still a number of moving parts governing what will happen to Greece’s banking system, however.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.