Friday, 16 April 2021 08:02 GMT

ECB lifts amount of emergency lending available to Greek banks

(MENAFN - AFP) The European Central Bank has increased the volume of emergency liquidity available to Greek banks to 65 billion euros ($74 billion), bank sources said Thursday.

"During a telephone conference today the ECB extended the ELA (emergency liquidity assistance) by one week," giving Greece "the amount it had requested," a source close to the Bank of Greece told AFP, without putting a figure on the amount.

Another source close to the negotiations said the ceiling for emergency assistance to Greek commercial banks had been raised by 5 billion euros, from the 60 billion euros authorised last week.

The ECB declined to comment on the information, which came as Greek Prime Minister Alexis Tsipras took his new government's debt and reform plan to an EU summit in Brussels.

Last week, the ECB effectively shut off Greek banks from a key channel of financing by saying it would no longer accept Greek sovereign bonds as collateral for loans in its normal refinancing operations.

Greek debt has a junk credit rating and, under ECB rules, should not qualify as collateral for loans.

But Athens had been granted a special waiver to that rule as long as it was deemed to be in compliance with the terms of its 240-billion-euro EU-IMF bailout.

The ECB announcement that it was lifting that waiver was seen as a severe blow to Greece and caused Athen's borrowing costs to soar.

It kept the ELA channel open, but lending under this facility is more expensive and it is the Greek central bank that is on the hook for any potential losses.

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