The European Central Bank (ECB) increased today the maximum Emergency Liquidity Assistance (ELA) that Greek banks can get from their national central bank by 600 million euros.
The ECB’s Governing Council held a phone conference on Thursday to set the limit, which policy makers had increased by 500 million euros to 68.8 billion euros on March 5. The council is scheduled to review the level again on March 18. The amount matches the Greek central bank’s precise request.
The ECB is reviewing ELA weekly, reflecting concern that banks will use it to finance the Greek government and so violate the EU law. The newly elected administration in Athens is struggling to gain access to aid payments as a cash crunch looms before the end of the month.
Greek banks were cut off from regular funding operations in February, forcing them into ELA.In calling the Greek government‘s bluff, it stopped accepting Greek bonds in return for funds, shifted the burden onto Athens‘ central bank to finance its own banks, dealing a big setback to government efforts to buy time to negotiate a new debt deal.
The government has argued that the austerity conditions of the program are hampering the economy’s recovery. According to Bloomberg, Greece’s statistical agency said on Thursday that the country’s unemployment rate rose to 26.1 % in the final quarter of 2014, from 25.5 % in the prior three months.
Earlier, Greek Finance Minister Yanis Varoufakis told Greece's Mega TV in an interview that “the ECB is pursuing a policy that can be considered asphyxiating toward our government."
Until now, the ECB had refused to give Athens any leeway to issue short-term debt to meet its funding needs amid a cash crunch as leftover bailout funds remain on hold.
Varoufakis said the ECB's stance is also aimed at Greece'seuro zonepartners and the International Monetary Fund funding its bailout, as a way to also force them to find a solution with Athens.
Asked about his relationship with his German counterpart, Wolfgang Schaeuble, the minister said: "Mr. Schaeuble has told me I have lost the trust of the German government. I have told him that I never had it. I have the trust of the Greek people."
Schaeuble has said that no aid would be handed toGreeceuntil international lenders had agreed that it had delivered on its reform commitments.