ECB extends lending to Greek banks to €89bn to tackle run
The European Central Bank has expanded its Emergency Liquidity Assistance (ELA) to banks in Greece by another €1 billion, bringing the total to €89 billion. The reason is the large cash withdrawals in recent days, media reports.
This is the fourth ELA increase since last Wednesday, when ELA was increased by €1.1 billion.
On Friday the ECB increased its aid by €1.8 billion to €85.9 billion, and on Monday the regulator provided another €2 billion.
The Bank of Greece has confirmed that over the weekend Greeks withdrew around €400 million through ATMs. In the three days from Friday to Sunday €2 billion in cash was withdrawn. On Monday, the figure reached €1.6 billion.
People in Greece fear the country may default on its multibillion euro debt and leave the eurozone. It is possible Greece will not receive the €7.2 billion installment of the second bailout program and will be unable to repay €1.6 billion of debt to the IMF by June 30.
This could lead to the introduction of controls over banking operations and a restriction on obtaining cash through ATMs and at cashiers.
Greek banks imposed on Monday an unofficial €3,000 limit on daily cash withdrawals.
After an emergency Eurogroup meeting in Brussels failed to produce results Monday, the finance ministers of the 19 eurozone countries will hold new talks on Wednesday to sort out the details of the new Greek proposals. A meeting of all 28 EU member states will take place on Thursday.
Even though the sides have advanced in talks, there are still things to be discussed.
Athens refuse to increase VAT on restaurant from 13 percent to 23 percent, as demanded by creditors and is reluctant to raise 13 percent VAT rate on electricity.
Greece postponed a €300 million payment to the IMF due June 5, saying it would put together four June installments totaling €1.6 billion and pay them at the end of the month.
Failure to strike a deal would lead to Greece leaving the eurozone, and most likely the EU, warned the Bank of Greece last week.