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| E.C.B. Agrees to Extend Lifeline to Athens | E.C.B. Agrees to Extend Lifeline to Athens |
| (35 minutes later) | |
| 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. | 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. |
| It was the second time this week that European Central Bank officials had conferred over the troubled Greek lenders. The central bank has effectively kept the banks on life support with billions of euros in emergency funding as anxious depositors accelerated their withdrawals. | |
| Valdis Dombrovskis, a vice president of the European Commission, said at a news conference in Luxembourg that the central bank had provided the extra emergency funding on Friday, and he urged the Greek government to push forward with reforms to quell the crisis. It was not immediately clear how much of an increase the central bank had provided. | Valdis Dombrovskis, a vice president of the European Commission, said at a news conference in Luxembourg that the central bank had provided the extra emergency funding on Friday, and he urged the Greek government to push forward with reforms to quell the crisis. It was not immediately clear how much of an increase the central bank had provided. |
| The decision by the European Central Bank was “basically to cover this urgent financing issue,” Mr. Dombrovskis said, after the second of two days of meetings of European Union finance ministers. “But it’s very clear that to regain financial stability, a clear agreement is needed on the program, and a credible strategy needs to be presented by the Greek authorities.” | The decision by the European Central Bank was “basically to cover this urgent financing issue,” Mr. Dombrovskis said, after the second of two days of meetings of European Union finance ministers. “But it’s very clear that to regain financial stability, a clear agreement is needed on the program, and a credible strategy needs to be presented by the Greek authorities.” |
| A smaller group of finance ministers, from the 19 countries that share the euro, was unable Thursday evening in Luxembourg to negotiate a deal in the long-running crisis. The stalemate has heightened fears that Greece will default on a large loan repayment on June 30 and that it is on the brink of a destabilizing exit from the currency bloc. | A smaller group of finance ministers, from the 19 countries that share the euro, was unable Thursday evening in Luxembourg to negotiate a deal in the long-running crisis. The stalemate has heightened fears that Greece will default on a large loan repayment on June 30 and that it is on the brink of a destabilizing exit from the currency bloc. |
| Immediately after the talks ended Thursday evening without a breakthrough, an emergency summit meeting of 19 eurozone leaders was scheduled for Monday. In part, the meeting was called to ease fears about the stability of the Greek banking system in the coming days, said one person with knowledge of the matter who spoke on the condition of anonymity. | Immediately after the talks ended Thursday evening without a breakthrough, an emergency summit meeting of 19 eurozone leaders was scheduled for Monday. In part, the meeting was called to ease fears about the stability of the Greek banking system in the coming days, said one person with knowledge of the matter who spoke on the condition of anonymity. |
| Concerns about the Greek banking system have been sharpened by the steep outflow in recent months of deposits in the face of growing fears about the country’s ability to remain in the eurozone. | Concerns about the Greek banking system have been sharpened by the steep outflow in recent months of deposits in the face of 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. | 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 its emergency funding 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 European Central Bank has been topping up its emergency funding 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. |
| “There’s no problem with the funding of Greek banks,” said a Greek banking official with knowledge of the European Central Bank’s funding decision who spoke on the condition of anonymity. “We all expect a positive outcome on Monday.” | “There’s no problem with the funding of Greek banks,” said a Greek banking official with knowledge of the European Central Bank’s funding decision who spoke on the condition of anonymity. “We all expect a positive outcome on Monday.” |
| The mood in Athens appeared relatively calm on Friday, and bank withdrawals did not appear to have escalated into a full-out bank run. After reports that the European Central Bank would increase the funding, stocks in Athens rose nearly 2 percent in afternoon trading and financial shares climbed about 3 percent. | The mood in Athens appeared relatively calm on Friday, and bank withdrawals did not appear to have escalated into a full-out bank run. After reports that the European Central Bank would increase the funding, stocks in Athens rose nearly 2 percent in afternoon trading and financial shares climbed about 3 percent. |
| The market may also have been bolstered by a statement earlier in the day from the office of Prime Minister Alexis Tsipras of Greece, which 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 may also have been bolstered by a statement earlier in the day from the office of Prime Minister Alexis Tsipras of Greece, which 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. |
| Mr. Tsipras was in St. Petersburg, Russia, on Friday speaking to business leaders at an economic conference. The visit raised eyebrows in Europe over concern that he was seeking a tighter embrace with Moscow as leverage in his negotiations with Greece’s creditors. | Mr. Tsipras was in St. Petersburg, Russia, on Friday speaking to business leaders at an economic conference. The visit raised eyebrows in Europe over concern that he was seeking a tighter embrace with Moscow as leverage in his negotiations with Greece’s creditors. |
| Those creditors — the other eurozone countries, the International Monetary Fund and the European Central Bank — have committed to €240 billion in bailout loans over the last 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. | Those creditors — the other eurozone countries, the International Monetary Fund and the European Central Bank — have committed to €240 billion in bailout loans over the last 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. |
| On Wednesday, the European Central Bank increased its so-called emergency liquidity assistance to 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. | On Wednesday, the European Central Bank increased its so-called emergency liquidity assistance to 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. |
| Jörg Krämer, the chief economist at Commerzbank, predicted in a note to clients on Friday that the central bank would probably “shy away from cutting off the vital E.L.A. assistance to Greek banks, which would otherwise prompt Greece to leave the monetary union.” | Jörg Krämer, the chief economist at Commerzbank, predicted in a note to clients on Friday that the central bank would probably “shy away from cutting off the vital E.L.A. assistance to Greek banks, which would otherwise prompt Greece to leave the monetary union.” |
| Mr. Krämer said that the European Central Bank would probably lower the value it assigns to collateral put forward by Greek banks in exchange for the emergency funding. He said another option for the central bank would be to freeze that emergency funding at current levels in the coming days, although that would “force Greece to impose capital controls.” | Mr. Krämer said that the European Central Bank would probably lower the value it assigns to collateral put forward by Greek banks in exchange for the emergency funding. He said another option for the central bank would be to freeze that emergency funding at current levels in the coming days, although that would “force Greece to impose capital controls.” |
| “It thus appears that the Greek drama will keep markets on tenterhooks for a while longer,” he wrote in the note to clients. | “It thus appears that the Greek drama will keep markets on tenterhooks for a while longer,” he wrote in the note to clients. |
| George Osborne, the British chancellor of the Exchequer, on Friday called on the Greek government “to do a deal before it is too late.” | George Osborne, the British chancellor of the Exchequer, on Friday called on the Greek government “to do a deal before it is too late.” |
| Speaking before Friday’s meeting of the European Union finance ministers, he said Britain had “taken the measures to increase our economic security so we can deal with risks like this from abroad.” | Speaking before Friday’s meeting of the European Union finance ministers, he said Britain had “taken the measures to increase our economic security so we can deal with risks like this from abroad.” |
| Donald Tusk, the president of the European Council who convened the emergency summit meeting for Monday, delivered a thinly veiled ultimatum to Greece to be prepared to soften its position or face the consequences of a default. | Donald Tusk, the president of the European Council who convened the emergency summit meeting for Monday, delivered a thinly veiled ultimatum to Greece to be prepared to soften its position or face the consequences of a default. |
| “The game of chicken needs to end, and so does the blame game,” Mr. Tusk said in a video message on Friday. “There is no time for any games. It is reality with real possible consequences, first and foremost for the Greek people.” | “The game of chicken needs to end, and so does the blame game,” Mr. Tusk said in a video message on Friday. “There is no time for any games. It is reality with real possible consequences, first and foremost for the Greek people.” |
| Mr. Tusk also appeared to warn Greece not to expect leniency from the leaders on Monday, and said that the summit meeting would not be the final step in the negotiations. | Mr. Tusk also appeared to warn Greece not to expect leniency from the leaders on Monday, and said that the summit meeting would not be the final step in the negotiations. |
| “We need to get rid of any illusions that there will be a magic solution at the leaders’ level,” he said. | “We need to get rid of any illusions that there will be a magic solution at the leaders’ level,” he said. |