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Individuals and households of Greece are hastily withdrawing money from banks. Bloomberg reports that total amount of retrieved money reached € 3.6 billion since the beginning of 2017. Sources of the agency note that stock of banknotes is decreasing. In addition, some Greeks are transferring their funds to foreign banks.
This situation forced the European Central Bank to raise the liquidity ceiling within the framework of the Emergency Liquidity Assistance (ELA) programme for the first time over the past year and a half.
"The ECB Board of Directors on March 22, 2017 did not object to raising the maximum amount of emergency liquidity provision to Greek banks to € 46.6 billion until April 5, 2017 at the Bank of Greece’s request," the Greek Central Bank said in a statement.
The regulator acknowledged that "to increase the ceiling by € 0.4 billion reflects development of the liquidity situation in Greek banks, taking into account flow of private sector deposits."
At the same time, liquidity through ELA is more expensive than usual for Greek banks as the rate is 1.55 instead of 0.05%.
Potential exacerbation of the liquidity situation may force the ECB to tighten controls on capital flow, put into effect in the summer of 2015, reports Bloomberg.
Greece again runs the risk of plunging into the financial crisis. The government and its international creditors cannot agree on allocation of the next tranche of aid. At that, the country will have to pay € 7 billion to the International Monetary Fund on July 1.
Meeting of finance ministers of Eurozone 19 countries on March 20 ended in vain. Just like before, Greece and creditors failed to find a compromise on what reforms and at what pace Athens should hold.
"The Euro group emphasizes the need for additional efforts to complete the report on the reforms’ progress. The parties reaffirmed their commitment to this task", reads the Euro group’s final statement.
Greek Finance Minister Dimitris Tzanakopoulos said Greece is interested in reaching an agreement as soon as possible. "This is our main goal, so we are striving to reach an agreement in April" - quoted by Reuters. An informal meeting of the EU ministers of economy and finance will be held in Malta on April 7.
Yet, only few believe that that the contradictions will be resolved so quickly since the agreement should have been reached at the end of last year.
Negotiations between Greece and international lenders have been going on for more than three months. The talk is being regularly interrupted due to disagreements over labor market reforms, pensions and the privatization plan.
It seems that Greece does not know what to do with this inextricable knot.
The country has already reduced pension payments to citizens, thus putting many near the poverty line. Apparently, the government simply cannot proceed to cut back on spending.
source: bloomberg.com, reuters.com
This situation forced the European Central Bank to raise the liquidity ceiling within the framework of the Emergency Liquidity Assistance (ELA) programme for the first time over the past year and a half.
"The ECB Board of Directors on March 22, 2017 did not object to raising the maximum amount of emergency liquidity provision to Greek banks to € 46.6 billion until April 5, 2017 at the Bank of Greece’s request," the Greek Central Bank said in a statement.
The regulator acknowledged that "to increase the ceiling by € 0.4 billion reflects development of the liquidity situation in Greek banks, taking into account flow of private sector deposits."
At the same time, liquidity through ELA is more expensive than usual for Greek banks as the rate is 1.55 instead of 0.05%.
Potential exacerbation of the liquidity situation may force the ECB to tighten controls on capital flow, put into effect in the summer of 2015, reports Bloomberg.
Greece again runs the risk of plunging into the financial crisis. The government and its international creditors cannot agree on allocation of the next tranche of aid. At that, the country will have to pay € 7 billion to the International Monetary Fund on July 1.
Meeting of finance ministers of Eurozone 19 countries on March 20 ended in vain. Just like before, Greece and creditors failed to find a compromise on what reforms and at what pace Athens should hold.
"The Euro group emphasizes the need for additional efforts to complete the report on the reforms’ progress. The parties reaffirmed their commitment to this task", reads the Euro group’s final statement.
Greek Finance Minister Dimitris Tzanakopoulos said Greece is interested in reaching an agreement as soon as possible. "This is our main goal, so we are striving to reach an agreement in April" - quoted by Reuters. An informal meeting of the EU ministers of economy and finance will be held in Malta on April 7.
Yet, only few believe that that the contradictions will be resolved so quickly since the agreement should have been reached at the end of last year.
Negotiations between Greece and international lenders have been going on for more than three months. The talk is being regularly interrupted due to disagreements over labor market reforms, pensions and the privatization plan.
It seems that Greece does not know what to do with this inextricable knot.
The country has already reduced pension payments to citizens, thus putting many near the poverty line. Apparently, the government simply cannot proceed to cut back on spending.
source: bloomberg.com, reuters.com