ELA to Greek banks maintained at its current level
- ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme
- ECB will work closely with Bank of Greece to maintain financial stability
- Emergency liquidity assistance maintained at Friday’s (26 June 2015) level
- Governing Council stands ready to review decision
- Governing Council closely monitoring situation and potential implications for monetary policy stance
The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.
Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.
Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).
The Governing Council stands ready to reconsider its decision.
Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.”
Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”
The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.
https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.e...
- ECB SAID TO SEE EXISTING GREEK ELA INADEQUATE FOR BANKS' NEEDS
- ECB SAID TO VIEW BANK HOLIDAY FOR GREECE AS NECESSARY
What Would Greek Capital Controls Look Like?
http://www.bloomberg.com/news/articles/2015-06-01/how-greek-...
http://twitter.com/suttonnick/status/615112479828348928
edit: scratch that. http://twitter.com/yanisvaroufakis/status/615127339102531584
So we have a democratic nation potentially forced to leave Euro, after democratically deciding it no longer wants the austerity imposed, being forced to leave by non democratic ECB while the democracies that appoint the ECB think it is going too far.
What's that quote from Hunt For Red October - "with all these planes in the sky, it's only a matter of time [before we start a war]"
The lesson for democracy - force governments who are going to adjust fiscal measures past a certain point to get referendum approval
- and look how well that works in California...
My understanding of this was that the greek banks are (without ECB help) insolvent and have been for some time. They are unable to raise capital on the open market, as the open market has decided that they are not confident enough in those banks to lend them money.
As a result the Emergency Liquidity Assitance from the ECB has been used, but that was only provided on the basis that the greek banks were solvent but had temporary liquidity problems.
As far as I understand it, as soon as Greece is no longer in a bailout Program (Tuesday by current reckoning) those banks will not be solvent any more (they hold large amounts of Greek government debt), and ELA can't (without some form of change of rules for the ECB) continue.
The ECB is just following it's rules and it's been known that this approach is where they would likely need to go for some time, absent a political intervention from the Europgroup or the IMF.
while the democracies that appoint the ECB
think it is going too far.
I'm sure France and Germany can put up the money to cover profligate Greek public spending if they want to. But if they've decided Greece needs to be cut off, I'm sure they'd much rather have an anonymous non-german non-french bureaucrat deliver the bad news than do it themselves.
"I'd love to give you a raise, but corporate is making big cuts everywhere... I'll do what I can for you, but I can't make promises."
So, the only similarity seems to be the ECB threatening to pull ELA. There has alreay been debate that the ECB is already overstepping their mandate, but I can't find an English source for that.
0: http://www.irishtimes.com/business/economy/o-reilly-hits-out...
But wow, the Grexit is painful even when put into the train wreck category. It's going on and on, and the invective, hate, and hard feelings linger and fester. The amount of misery this has produced seems vastly out of proportion to the incident itself. I wonder if severe, immediate action taken at the beginning of the crisis wouldn't have resulted in something much less painful than this. 25% shrinkage in the economy and then massive bank closings? Good grief. It's becoming reminiscent of post WWI Germany.
That's a very easy target. Probably easier to ignore the high cost of hiring, bureacracy, corruption,...
However if the ECB follows through on this, the end result may be the same and it's only a matter of time before the entire ELA bailout is unwound like in Cyprus.
Put another way, there will be no further increase in ELA and the Greek banks have used the previous allotment, so their coffers are running dry. It will be a very tough week in Athens.
No decision has been made yet, so this is just misinformation. Expect more of this over the next days.
- Can I attribute it? "Minister speaks out"?
- No, no, no.
- Then, where did I get the story? I can't say, "Officially announced."
- "Government spokesman"?
- How about, "Sources close to Minister"?
- Hold on, I don't want everybody to know I told you! Couldn't you do,
"Speculation is growing in Westminster"?
- A bit weak.
- "Unofficial spokesman"?
- Used that twice this week already!
- The Cabinet's leaking like a sieve, isn't it?See http://www.bbc.co.uk/guidelines/editorialguidelines/edguide/... (I would make a clearer distinction between unnamed ("we know who (s)he is, but cannot tell you") and anonymous ("we don't know who (s)he is, so we cannot tell you") sources)
If you've been following the greece coverage, there's been lots of documents leaking from various sources on both sides of the negotiations. Last week when the initial greek proposal and the IMF "red-lined" version were in discussion, both were leaked on the day...
> in many countries where politicians and civil servants
> want something out without having it tied to them
> "unnamed sources"
To me all these conflicting reports smell like panic; decision makers just don't know what to do now, and the BBC does not know what to report. Sounds like 2008 all over again.
If Greece exits the Euro, I wonder if that will embolden other countries to do the same.
To address your other point: I think the horrible situation that will arise in Greece in the following weeks/months will make other countries certainly think twice about getting out of the Euro.
Most countries have growing anti-EU nationalist movements, and ass-raping Greece isn't going to make them less popular.
But the IMF have no interest in a strong Europe, because before 2008 European policy was heading in an aggressively anti-corporate direction.
A bleeding and uncertain Europe with a population terrified of poverty and old age is much more to their liking.
Remember total QE lending to banks is the far side of $2.5tn, and most of it is secured against assets that are clearly worthless.
The IMF itself is happy to agitate against austerity when it suits its political aims, and to hand out money that's unlikely to be repaid: see also, Ukraine.
So this is a purely political pantomime. Greek solvency is simply a pretext for political power plays - another attempt to enforce the usual neo-liberal "reform" agenda which aims to destroy the last century's traditions of socially responsible government spending.
You have a limited understanding of the situation. And you don't need to be that insulting toward Greece.
I know here it is apparently ok to make fun of people in a dare situation and talk about them like they are fool and idiots yet in that case the responsibility is shared across many parties and the EU itself has a huge responsibility in that fiasco.
What the point saying what you just said? does it make you feel smarter or like you belong to a superior class? Would you want others to talk about you or your country that way when things turn south? no, so have a little respect. We are talking about people here who are mostly victims. Or do you think people here will laught at your speech because that's what they do in real life when you say horrible things?
Greece is not a person, Greece is a nation state. It has implemented severe fiscal cutbacks after being forced to by its creditors. Cutbacks which have ruined the country's economy, massively increased poverty, and made it more difficult to pay back its debts.
Now its people have voted in a government that wishes to make different reforms. Ones that also keep the book balanced, but do not hurt the weakest in society as much or destroy economic productivity.
This entire mess started with Greece not having its finances in order, and essentially lying about this for years to the rest of the Eurogroup. After it became clear how dire the situation was, the Eurogroup stepped in and helped Greece by giving them money (LOTS of money). Had the Eurogroup not done this, Greece would have defaulted on its debts years ago, and the country would have gone bankrupt.
Now if someone offers to help you by giving you money, provided you meet certain conditions, you can either accept and comply with the conditions, or you can refuse. The fact is that Greece gladly accepted the billions upon billions of euros, and the conditions that money came with.
I am fully aware that the measures demanded by Greece's creditors are tough. Some would say it is doubtful whether they are actually effective at all. And the demanded measures are certainly driven partly by political motives. All this is true.
But it is mind-boggling to me that after the Eurogroup provided several hundred billion euro's in aid to Greece, anyone would turn around and claim the current crisis is in no way the Greeks' own fault.
It frigthens me to think such a line of reasonning could pop up on security or war matters.
It is about pensioners and state employees.
There is, however, deep structural or cultural issues that causes Greece to have such a massive tax gap: http://www.imf.org/external/pubs/ft/scr/2013/cr13155.pdf.
People may well be working hard, but a significant enough number of people are not contributing enough to the state, yet are demanding (by voting) ever more from it, and leaders seemed to have always been relaxed about it (I can't find the source again, but I remember reading that there is even a significant tax cap in the civil service itself).