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ECB 'to end Greek bank lifeline' Greece debt crisis: ECB 'to end' bank emergency lending
(30 minutes later)
The European Central Bank is expected to end emergency lending to Greece's banks on Sunday, the BBC understands.The European Central Bank is expected to end emergency lending to Greece's banks on Sunday, the BBC understands.
The country's banks depend on the ECB's Emergency Liquidity Assistance (ELA). Its governing council is meeting later. Well-placed sources told BBC economics editor Robert Peston a decision to end the Emergency Liquidity Assistance (ELA) would be made by the ECB's governing council later on Sunday.
Greece will probably have to "announce a bank holiday on Monday, pending the introduction of capital controls", a source told the BBC's Robert Peston. Greek banks depend on ELA.
Cutting the lifeline could push Greece out of the euro. Some analysts have tweeted that the ECB is likely to cap, but not end, the ELA.
And French Prime Minister Manuel Valls said the ECB "is independent but... I don't think it can cut off rations [for the Greeks]". He said "it's the Greek nation that is suffering".
Greece will probably have to "announce a bank holiday on Monday, pending the introduction of capital controls", our economics editor says.
The bailout for heavily indebted Greece expires on Tuesday and talks have broken down.The bailout for heavily indebted Greece expires on Tuesday and talks have broken down.
Greek banks would find themselves in serious straits as soon as Monday if the ECB went ahead and cut the lifeline, the BBC economics editor says. Greek banks would find themselves in serious straits as soon as Monday if the ECB went ahead and cut the lifeline, our economics editor says.
It is one of the most momentous decisions the ECB has ever faced, since the euro was launched on 1 January 1999.
Capital controls are restrictions on how much customers can withdraw from banks. Until now, the Greek government has signalled that it does not want to impose such controls.Capital controls are restrictions on how much customers can withdraw from banks. Until now, the Greek government has signalled that it does not want to impose such controls.
In recent weeks, Greeks have withdrawn billions of euros from banks, and long queues formed at cashpoints on Saturday, amid fears that banks would not open on Monday.In recent weeks, Greeks have withdrawn billions of euros from banks, and long queues formed at cashpoints on Saturday, amid fears that banks would not open on Monday.
The ECB has been sending emergency funds on a daily basis to the Greek central bank, which then allocates it to the high-street banks.The ECB has been sending emergency funds on a daily basis to the Greek central bank, which then allocates it to the high-street banks.
Grexit risk loomsGrexit risk looms
Austria's Finance Minister Hans Joerg Schelling said a Greek exit from the euro now "appears almost inevitable". A withdrawal from the euro - known as "Grexit" - is not inevitable, says our editor, as the eurozone did resolve Cyprus's banking crisis in 2013 and the country stayed in the euro.
But Robert Peston says a "Grexit" from the euro is not inevitable, as the eurozone did resolve Cyprus's banking crisis in 2013 and the country stayed in the euro.
Capital controls were imposed on Cypriot banks, and remained in place for a long time - the last restrictions were only lifted in April this year.Capital controls were imposed on Cypriot banks, and remained in place for a long time - the last restrictions were only lifted in April this year.
Greece's situation is more difficult, Robert Peston reports. Capital controls are seen as an important step towards leaving the euro, because the single currency's rules require free movement of capital.Greece's situation is more difficult, Robert Peston reports. Capital controls are seen as an important step towards leaving the euro, because the single currency's rules require free movement of capital.
But Greece could remain in if its government and the bailout providers - the EU and IMF - can restart constructive negotiations, he reports.But Greece could remain in if its government and the bailout providers - the EU and IMF - can restart constructive negotiations, he reports.
Political clashPolitical clash
On Saturday eurozone finance ministers - the Eurogroup - refused to extend Greece's desperately-needed bailout beyond Tuesday.On Saturday eurozone finance ministers - the Eurogroup - refused to extend Greece's desperately-needed bailout beyond Tuesday.
The ministers blamed Greek Prime Minister Alexis Tsipras's surprise call for a referendum on 5 July on the bailout conditions.The ministers blamed Greek Prime Minister Alexis Tsipras's surprise call for a referendum on 5 July on the bailout conditions.
The final €7.2bn (£5bn; $8bn) of Greece's second bailout has been frozen since last summer, as lenders demanded more Greek progress on deep economic reform.The final €7.2bn (£5bn; $8bn) of Greece's second bailout has been frozen since last summer, as lenders demanded more Greek progress on deep economic reform.
Without more lending to Greece the country will default on a €1.6bn repayment due to the IMF on Tuesday.Without more lending to Greece the country will default on a €1.6bn repayment due to the IMF on Tuesday.
Under the rules governing the euro, the ECB's emergency lifeline could not be continued if the ECB considered Greek banks to be insolvent.Under the rules governing the euro, the ECB's emergency lifeline could not be continued if the ECB considered Greek banks to be insolvent.
Robert Peston says that with Greece no longer participating in a formal rescue programme, the solvency of the Greek state would be in doubt, as it is so intimately linked to the banks' solvency.Robert Peston says that with Greece no longer participating in a formal rescue programme, the solvency of the Greek state would be in doubt, as it is so intimately linked to the banks' solvency.
Mr Tsipras's leftist Syriza government rejects the bailout terms, after five years of lender-imposed austerity that has increased Greek unemployment and cut pensions and welfare benefits.Mr Tsipras's leftist Syriza government rejects the bailout terms, after five years of lender-imposed austerity that has increased Greek unemployment and cut pensions and welfare benefits.
Greek repayments dueGreek repayments due