The European Central Bank increased its funding lifeline to Greece’s banks again yesterday, sources with direct knowledge of the decision said, allowing the country’s banks to stay open as Athens inches toward a deal with creditors.
The latest increase amounted to “a bit less than one billion euros,” one of the people told Reuters. It raises the value of the ECB’s Emergency Liquidity Assistance (ELA) to around 89 billion euros ($100 billion), a growing liability that is worrying many around the euro zone.
One of the people who spoke to Reuters said the decision had been prompted by “the positive signal from the leaders’ summit meeting” and hopes that a deal was at hand.
But Ralph Brinkhaus, deputy parliamentary floor leader for German Chancellor Angela Merkel’s conservatives, criticized the decision and called on Athens to introduce controls on the movement of money instead.
“Through the continuous increase of the limit for emergency credit by the ECB, Greek banks and, ultimately, the Greek state are artificially managing to keep their heads above water,” Brinkhaus said. “You have to ask yourself, what needs to happen before the Greek state finally introduces capital controls?”
The move, the third day in a row that the ECB has sanctioned additional funding, follows Athens’ presentation on Monday of new budget proposals.
However, Greek lawmakers reacted angrily yesterday, with parliament’s deputy speaker saying the government’s offers would struggle to win approval from the legislature.
With nervous Greek savers and companies withdrawing billions of euros in cash from their accounts, the country’s banks depend almost entirely on central bank funding to avoid collapsing and potentially dragging the country down with them.
The latest increase in ELA provides some breathing space as Greece’s Prime Minister Alexis Tsipras seeks to clinch a formal deal with euro zone backers.