The ECB is unlikely to extend emergency funding for Greek banks, pressuring Athens before Tuesday’s crucial Eurogroup meeting

Getty/Hannelore Foerster

The European central bank is likely to maintain emergency funding for Greek banks at its current restricted level, according to a report from Reuters citing people familiar with the matter.

Having seen the Greek people vote astoundingly in favour of rejecting austerity measures tied to bailout funding from the nation’s international creditors, the ECB are likely to keep Emergency Liquidity Assistance at its current level when its member meet on Monday, leaving Greek banks, and in turn the Greek government, with little or no room for manoeuvre.

According to Reuters maintaining the status quo would give Greek banks little time before they use up all of the roughly 89 billion euros of funding available and ensure that banks remain closed for at least the coming days as cash runs dry.

Last Friday the head of Greece’s banking association stated that the nation’s banks had roughly a €1 billion “liquidity cushion”, with future funding dependent on actions taken by the ECB.

With the ECB unlikely to extend emergency funding to Greek banks the subsequent squeeze on bank funding will keep pressure on the Greek prime minister Alexis Tsipras as he prepares to meet with eurozone leaders on Tuesday.

In the interim the ECB may ask eurozone members to guarantee Greek debt in order to facilitate additional funding for Greece’s financial system, something that seems implausible given likely opposition from other member states.

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