The European Central Bank’s governing council is to hold an emergency conference call today, to decide whether to continue to give billions of euro to Greek banks.
The ECB will review its emergency liquidity assistance programme (ELA) because the Greek bailout will run out on Tuesday.
France’s prime minister, Manuel Valls, has dropped a clear hint that the European Central Bank should keep supporting Greece’s banks:
Speaking on Europe 1 radio, Valls said:
“The European Central Bank is independent and I don’t doubt it will assume its responsibilities. I don’t think it can cut off support, to put it another way.”
Technically, it takes a two-thirds majority at the ECB to reject a request for more emergency funding from a national central bank.
Valls also warned Greek voters that a “no” vote in the upcoming referendum could lead to Greece leaving the euro zone.
“The Greek people must be able to decide lucidly. If there’s a negative vote, there is a real risk …of exiting the euro zone.”
The BBC is reporting this morning that the European Central Bank will vote to ‘turn off’ Emergency Liquidity Assistance (ELA) for Greek banks at its meeting later today, but many experts are doubtful.
Without ELA, it is unlikely that the severely weakened banks in Greece would be able to open their doors on Monday.
The ELA has resulted in tens of billions of euro being pumped into Greek banks which have been damaged by investors and depositors withdrawing their money out of fear they could be about to collapse.
Yesterday, eurozone finance ministers refused to extend the bailout, blaming the Greek government for unilaterally ending talks with creditors and announcing a surprise referendum.
In turn, the Greek government criticised the European Union for failing to live up to its founding principles of solidarity and equality and trying to impose a debt plan which would hurt the poorest and only deepen the country’s economic crisis