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Greek crisis: ECB meeting to decide on €3.5bn emergency funding European Central Bank agrees emergency funding for Greece
(about 5 hours later)
The European Central Bank is holding an emergency meeting on Friday morning to discuss whether to pump more funds into Greek banks to prevent a full-blown banking crisis. The European Central Bank has agreed to pump more funds into Greek banks to prevent a full-blown financial emergency in the eurozone’s crisis state.
The meeting, starting at noon (11am UK time) via conference call, comes after the acrimonious breakdown of talks between finance ministers in Luxembourg on Thursday night raised the prospect of Greece’s exit from the eurozone. The decision – taken at a hastily convened conference call on Friday – comes after the acrimonious breakdown of talks between finance ministers in Luxembourg on Thursday night raised the prospect of Greece’s exit from the single currency bloc.
Related: Greece faces banking crisis after eurozone meeting breaks downRelated: Greece faces banking crisis after eurozone meeting breaks down
After the talks broke up with a war of words between Greece and its creditors, European leaders agreed to an emergency summit on Monday evening. The timing - just three days before a scheduled summit of all European Union leaders - was determined by fears of a run on the banks. The ECB’s decision-making governing council on Friday agreed that Greek banks could draw on extra funds from an emergency facility. However, it was unclear whether Greece had got the full €3.5bn (£2.5bn) it was hoping for under the Emergency Liquidity Assistance (ELA) programme, or whether it has been given only enough to see it through until Monday’s meeting of EU leaders.
Greek depositors have withdrawn more than €3.2bn since Monday, including €1.2bn on Thursday, raising fears of a run on the banks. A spokesman at the ECB declined to comment.
The ECB warned finance ministers on Thursday that Greek banks may not open on Monday. According to Reuters, when asked whether the banks would be open on Friday, ECB executive board member Benoit Coeure said: “Tomorrow yes. Monday I don’t know.” The ECB has set another meeting for Monday, suggesting that the latest cash injection will only see Greece through the weekend.
On Friday morning, the ECB’s decision-making governing council will discuss a request from the Bank of Greece for an increase in liquidity to Greek banks. According to newspaper Kathimerini, the Bank of Greece will ask for – and expects to get – €3.5bn (£2.5bn) of assistance via the Emergency Liquidity Assistance (ELA) facility. The request comes just two days after the ECB threw Greece a €1.1bn lifeline in ELA funds. Monday is shaping up to be a red-letter day in the five-year old Greek debt drama. The ECB meeting will be followed by yet another gathering of eurozone finance ministers in the afternoon, topped by an emergency summit of European leaders scheduled for the evening.
The talks between finance ministers broke down after barely an hour of discussions on the Greek crisis. Christine Lagarde, the head of the International Monetary Fund, said there was an urgent need for dialogue with adults in the room. European leaders agreed to the special summit after a meeting between Greece and its eurozone creditors broke up amid recriminations over who was responsible for the impasse. The timing of the emergency leaders’ summit - just three days before a scheduled meeting of all European Union leaders - was determined by fears of a run on Greek banks.
Greece’s prime minister, Alexis Tsipras, has insisted that only a political deal at the level of heads of state and government can end the crisis. Speaking on Friday morning, he said Monday’s summit was a positive development on the road towards a deal. The ECB has warned finance ministers that Greek banks may not open on Monday. According to Reuters, when asked whether the banks would be open on Friday, ECB executive board member Benoit Coeure said: “Tomorrow yes. Monday I don’t know.”
The decision to increase emergency funds means that Greece’s ELA cap now exceeds €84.1bn. It was raised to this level on Wednesday when the ECB agreed to a €1.1bn in funds.
But since that midweek decision, the pace of withdrawals from Greek banks has accelerated.
Greek depositors have withdrawn more than €3bn since Monday, including €1bn on Thursday alone, deepening fears of a run on the banks. Greece is shut out of international credit markets and dependent on central bank finance to replace deposits withdrawn from cash machines and counters.
Greece’s current bailout expires on 30 June, when the Greek government is due to repay the International Monetary Fund €1.6bn.
Talks between finance ministers on Thursday broke down after barely an hour of discussions on the Greek crisis. Christine Lagarde, the head of the IMF, said there was an urgent need for dialogue with adults in the room.
Greece’s prime minister, Alexis Tsipras, has insisted that only a political deal at the level of heads of state and government can end the crisis. Speaking in Russia on Friday morning, he said Monday’s summit was a positive development on the road towards a deal.
“All those who are betting on crisis and terror scenarios will be proven wrong. There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro”“All those who are betting on crisis and terror scenarios will be proven wrong. There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro”
European stock markets opened flat on Friday morning, reflecting the fact that investors have already priced in the chaotic negotiations over the five-year Greek debt crisis.European stock markets opened flat on Friday morning, reflecting the fact that investors have already priced in the chaotic negotiations over the five-year Greek debt crisis.
The UK chancellor, George Osborne, has urged Greece to come to a deal with its creditors. Arriving in Luxembourg for a meeting of EU finance ministers, he said: “We have entered the eleventh hour of this Greek crisis and we urge the Greek government to do a deal.”The UK chancellor, George Osborne, has urged Greece to come to a deal with its creditors. Arriving in Luxembourg for a meeting of EU finance ministers, he said: “We have entered the eleventh hour of this Greek crisis and we urge the Greek government to do a deal.”
“We hope for the best, but we now must be prepared for the worst.”“We hope for the best, but we now must be prepared for the worst.”