ECB decides to continue ELA for banks, yet Greek Systemic Stability Council meets Sunday afternoon

After a long call conference the European Central Bank decided to continue providing further Emergency Liquidity Assistance to Greek banks. In a statement issued by the ECB at 3:30 pm (GR time) on Sunday, the ECB stresses that it “takes note of decision on Greek referendum and non-prolongation of the EU adjustment programme.” Referendum is scheduled for July 5th and “EU adjustment program” ends on June 30th.

The ECB underlines further that “it will work closely with Bank of Greece to maintain financial stability” and that the ELA will be “maintained at the level of Friday’s (26 June 2015)”.

At the same time the ECB cautions that the “Governing Council stands ready to review decision.”

28 June 2015 – ELA to Greek banks maintained at its current level

• ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme
• ECB will work closely with Bank of Greece to maintain financial stability
• Emergency liquidity assistance maintained at Friday’s (26 June 2015) level
• Governing Council stands ready to review decision
• Governing Council closely monitoring situation and potential implications for monetary policy stance

The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.

Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

The Governing Council stands ready to reconsider its decision.

Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.”

Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”

The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.”

source: ECB website

The ECB decision is been interpreted as “ELA continuation until after the Referendum.” At the same time, several analysts, say that “Greece is buying time of 2-3 weeks” and that “ELA continuation would be crucial again on July 20th, when Greece has to pay Greek bonds to ECB.”

Nevertheless, and despite the ECB decision, the Greek Systemic Stability Council convenes at 4 pm  Sunday afternoon to discuss all possible and impossible scenarios. According to state broadcaster ERT (at 3:50 pm), “the council will look also on possibility to impose caps to cash withdrawals or even bank closure in order to preserve financial stability.” Bank of Greece governor, Finance Minister, deputy Finance Minister and other financial sector officials participate in the Council’s meeting. More details are expected at around 6-7 pm GR time on Sunday.

An hour earlier FinMin Varoufakis dismissed he spoke of “capital controls” to BBC thus adding to confusion about the banks and the cash withdawals.

Yanis Varoufakis ‏@yanisvaroufakis 1h1 hour ago

“Capital controls within a monetary union are a contradiction in terms. The Greek government opposes the very concept.”

Greek media reported on Saturday night that “estimated one billion euro left the Greek banks from Friday evening to Saturday afternoon.” PM Tsipras announced the Referendum at 1 am Saturday, but rumors of upcoming “capital controls” on media, websites and social media had pushed many Greeks to the ATMs even in the middle of the night.

PS caps on cash withdrawals? Huh? Some pensions have not been paid yet, pay day is June 30th.