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E.C.B. Increases Emergency Loans for Greek Banks Eurozone Finance Ministers and E.C.B. Buy Time for Greece
(35 minutes later)
FRANKFURT — The European Central Bank on Thursday gave a vote of confidence to Greece on Thursday by expanding an emergency line of credit for the country’s banks. FRANKFURT — The European Central Bank on Thursday gave a vote of confidence to Greece by expanding an emergency line of credit for the country’s banks, while the eurozone’s finance ministers agreed to keep Greek bailout negotiations in motion.
The increase — 900 million euros, or almost $990 million — is meant to help meet the banks’ needs for an additional week. The emergency loan increase — 900 million euros, or almost $990 million — is meant to help meet the banks’ needs for an additional week.
That decision, announced at a news conference by Mario Draghi, the central bank’s president, does not give the banks much extra breathing room. But it is likely to be welcomed by Greek banks and their depositors as a sign that the central bank intends to continue providing support while the country’s bailout negotiations continue. The central bank’s move came as eurozone finance ministers agreed separately on Thursday to “grant in principle” a new bailout of more than €80 billion. But the ministers kept up the pressure by demanding that Athens “swiftly” adopt further measures to overhaul its economy, in keeping with a contentious deal announced early Monday, after all-night negotiations between Greece and leaders of other countries in the eurozone.
It was not immediately clear whether the money would enable Greece banks, closed since June 29, to reopen next week. Mr. Draghi said it was “hard to predict.” The decisions by the eurozone finance ministers and by the European Central Bank came hours after the Greek Parliament acceded to demands from its creditors and passed the first in a series of measures intended to improve the performance of the economy and impose budget discipline on the government.
The move came as Europe was awaiting word from eurozone finance ministers, who met earlier on Thursday, on whether they would recommend a bridge loan from the European Union — or additional emergency measures — to keep the Greece economy afloat in coming weeks. Separately, the European Commission, the executive arm of the European Union, proposed on Thursday that Greece be given €7 billion in short-term loans from an emergency fund financed by all 28 members of the union. This proposal has run into strong opposition from countries that do not use the euro, like Britain, which object to their money being used to solve the euro area’s problems.
If such money is dispensed, it might enable Athens, among other steps, to repay about €2 billion in arrears to the International Monetary Fund, as well as €4.25 billion owed to the European Central Bank next Monday.If such money is dispensed, it might enable Athens, among other steps, to repay about €2 billion in arrears to the International Monetary Fund, as well as €4.25 billion owed to the European Central Bank next Monday.
But Mr. Draghi said, without elaborating, that he was confident that Greece would be able to make those payments. “I want to thank all of the members of the E.U. that have made that possible,” he said. The central bank’s president, Mario Draghi, said at a news conference on Thursday that he was confident Greece would be able to make those payments. He did not elaborate, but said, “I want to thank all of the members of the E.U. that have made that possible.”
The European Central Bank and the eurozone finance ministers were making their decisions on Thursday hours after the Greek Parliament acceded to demands from its creditors and passed a series of measures intended to improve the performance of the economy and impose budget discipline on the government. The one concrete decision was the central bank’s agreement to increase the emergency line of credit for Greek banks, even if the amount does not give the lenders much extra breathing room. But the decision is likely to be welcomed by Greek banks and their depositors as a sign that the central bank intends to continue providing support while the country’s bailout negotiations continue.
Mr. Draghi said that the tentative bailout accord that Greece reached with its eurozone creditors on Monday had the essential components that the central bank had been urging for Greece, including economic growth, social fairness and financial stability. He said Monday’s agreement was meant to “ensure that Greece will become a thriving economy in the euro area.” It was not immediately clear whether the money would enable Greek banks, closed since June 29, to reopen next week. Mr. Draghi said it was “hard to predict.”
He said the tentative bailout accord that Greece reached with its eurozone creditors on Monday had the essential components that the central bank had been urging for Greece, including economic growth, social fairness and financial stability. He said Monday’s agreement was meant to “ensure that Greece will become a thriving economy in the euro area.”
Whether Greece can agree to a new bailout program is still far from certain. Germany’s finance minister, Wolfgang Schäuble, suggested on Thursday that Greece might be better off leaving the eurozone. And some members of the European Central Bank’s policy board, the Governing Council, are known to be skeptical about the prudence of continuing to provide loans to Greece’s teetering banks.Whether Greece can agree to a new bailout program is still far from certain. Germany’s finance minister, Wolfgang Schäuble, suggested on Thursday that Greece might be better off leaving the eurozone. And some members of the European Central Bank’s policy board, the Governing Council, are known to be skeptical about the prudence of continuing to provide loans to Greece’s teetering banks.
Asked at the news conference whether the Governing Council decision to increase the emergency loans had been unanimous, Mr. Draghi avoided a direct answer. He said that agreeing to increase the loans, under the central bank’s rules, required only a two-thirds majority.Asked at the news conference whether the Governing Council decision to increase the emergency loans had been unanimous, Mr. Draghi avoided a direct answer. He said that agreeing to increase the loans, under the central bank’s rules, required only a two-thirds majority.
The European Central Bank effectively forced Greek banks to close on June 29 when it capped the emergency cash it provides to them at €89 billion.The European Central Bank effectively forced Greek banks to close on June 29 when it capped the emergency cash it provides to them at €89 billion.