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E.C.B. Holds Emergency Meeting on Extending Lifeline to Greece E.C.B. Agrees to Extend Lifeline to Athens, Greek Official Says
(35 minutes later)
The European Central Bank was holding an emergency meeting on Friday to decide whether to increase its funding of increasingly strained Greek banks after efforts failed on Thursday to broker a deal on Greece’s flailing bailout. Extending its lifeline to Greek banks, the European Central Bank on Friday increased its emergency funding of the country’s financial system after efforts failed on Thursday to broker a deal on Greece’s flailing bailout, according to a Greek banking official with knowledge of the decision.
It is the second time this week that the European Central Bank has conferred over the troubled Greek financial system, which has been effectively kept on life support by the bank with billions of euros in emergency funding as anxious depositors pulled out their money. It was the second time this week that European Central Bank officials had conferred over the troubled Greek financial system. The central bank has effectively kept Greek lenders on life support with billions of euros in emergency funding as anxious depositors accelerated their withdrawals.
Finance ministers from the eurozone were unable at their meeting on Thursday in Luxembourg to hammer out a deal in the long-running crisis, heightening fears that Greece would default on a large loan repayment on June 30 and that it was on the brink of a destabilizing exit from the euro currency bloc. “The E.C.B. decided to increase emergency liquidity to Greece today,” said the Greek official, who spoke on the condition of anonymity because the talks were confidential. It was not immediately clear how much of an increase the central bank had provided. The official added that “there’s no problem with the funding of Greek banks.”
An emergency summit meeting of 19 eurozone leaders was scheduled for Monday immediately after the talks ended without a breakthrough on Thursday evening. In part, the meeting was called to quell fears about the stability of the Greek banking system during the coming days, said one person with knowledge of the matter who spoke only on the condition of anonymity because the discussions were private. The move came after finance ministers from the eurozone were unable at their meeting on Thursday in Luxembourg to hammer out a deal in the long-running crisis. The stalemate has heightened fears that Greece would default on a large loan repayment on June 30 and that it was on the brink of a destabilizing exit from the euro currency bloc.
Concerns about the Greek banking system have been sharpened by the accelerating outflow of deposits amid growing fears about the country’s ability to remain in the eurozone. An emergency summit meeting of 19 eurozone leaders was scheduled for Monday immediately after the talks ended without a breakthrough on Thursday evening. In part, the meeting was called to quell fears about the stability of the Greek banking system during the coming days, said one person with knowledge of the matter who spoke on the condition of anonymity because the discussions were private.
Concerns about the Greek banking system have been sharpened by the steep outflow in recent months of deposits amid growing fears about the country’s ability to remain in the eurozone.
Analysts and bankers said they believed that about an additional 3 billion euros, or about $3.4 billion, was withdrawn from the banks this week.
The European Central Bank has been topping up so-called emergency liquidity assistance to Greek banks regularly since the beginning of this year. According to figures from the Greek central bank, Greek bank deposits fell in April to €133 billion, the lowest level in a decade. More than €30 billion was withdrawn between the end of last November and the end of April.
The mood in Athens appeared relatively calm on Friday, perhaps because Greeks are inured to dramatic warnings after five years of crisis. Greeks were still pulling out savings, as they have been in recent days, but the withdrawals did not appear to have escalated into a full-out bank run. The Athens Stock Exchange was jittery on Friday, opening up 1 percent before trading about half a percent down at midday.The mood in Athens appeared relatively calm on Friday, perhaps because Greeks are inured to dramatic warnings after five years of crisis. Greeks were still pulling out savings, as they have been in recent days, but the withdrawals did not appear to have escalated into a full-out bank run. The Athens Stock Exchange was jittery on Friday, opening up 1 percent before trading about half a percent down at midday.
The market buoyancy may have been prompted by a statement earlier in the day from the office of Prime Minister Alexis Tsipras of Greece that welcomed the decision to hold a summit meeting of eurozone leaders, describing it as “a positive development on the road toward a deal.”The market buoyancy may have been prompted by a statement earlier in the day from the office of Prime Minister Alexis Tsipras of Greece that welcomed the decision to hold a summit meeting of eurozone leaders, describing it as “a positive development on the road toward a deal.”
“There will be a solution based on respect for European Union laws and democracy that will allow Greece to return to growth within the euro,” the statement said.“There will be a solution based on respect for European Union laws and democracy that will allow Greece to return to growth within the euro,” the statement said.
On Wednesday, the European Central Bank increased its emergency funding of Greek banks by 1.1 billion euros, or about $1.25 billion, to €84.1 billion, according to two officials with direct knowledge of the matter who spoke only on the condition of anonymity. On Wednesday, the European Central Bank increased its emergency funding of Greek banks by €1.1 billion euros, to €84.1 billion, according to two officials with direct knowledge of the matter who spoke on the condition of anonymity.
The European Central Bank has been topping up so-called emergency liquidity assistance to Greek banks regularly since the beginning of this year.
According to figures from the Greek central bank, Greek bank deposits fell in April to €133 billion, the lowest level in a decade. More than €30 billion was withdrawn between the end of last November and the end of April.
Analysts and bankers said they believed that another €3 billion or more was withdrawn from the banks this week.
Greece’s creditors — the other eurozone countries, the International Monetary Fund and the European Central Bank — have committed to €240 billion in bailout loans over the past five years. The European portion of the bailout ends on June 30, and the two sides have been far apart on what steps Greece must take to overhaul its pension, tax and budgeting systems to win continued support from Europe.Greece’s creditors — the other eurozone countries, the International Monetary Fund and the European Central Bank — have committed to €240 billion in bailout loans over the past five years. The European portion of the bailout ends on June 30, and the two sides have been far apart on what steps Greece must take to overhaul its pension, tax and budgeting systems to win continued support from Europe.
“We have entered the eleventh hour of this Greek crisis, and we urge the Greek government to do a deal before it is too late,” George Osborne, the British chancellor of the Exchequer, told reporters on Friday morning as he arrived at a meeting of the European Union’s 28 finance ministers in Luxembourg. “We have entered the 11th hour of this Greek crisis, and we urge the Greek government to do a deal before it is too late,” George Osborne, the British chancellor of the Exchequer, told reporters Friday morning as he arrived at a meeting of the European Union’s 28 finance ministers in Luxembourg.
“We hope for the best, but we now must be prepared for the worst,” Mr. Osborne said. He said Britain had “taken the measures to increase our economic security so we can deal with risks like this from abroad.”“We hope for the best, but we now must be prepared for the worst,” Mr. Osborne said. He said Britain had “taken the measures to increase our economic security so we can deal with risks like this from abroad.”