The European Central Bank decided today to maintain and to not increase Emergency Liquidity Assistance to Greek banks, despite a request for an allegedly 3 billion ELA increase sent by Greek government on Sunday. Furthermore the ECB decided to “adjust” “haircuts on Greek collateral for ELA, although it did not reveal the haircut rate.
In normal English “Haircuts on collateral for ELA adjusted” means that the Greek bond value Greek banks give to Greek Central Bank is not paid in 100%.
ECB – PRESS RELEASE
6 July 2015 – ELA to Greek banks maintained
- Emergency liquidity assistance maintained at 26 June 2015 level
- Haircuts on collateral for ELA adjusted
- Governing Council closely monitoring situation in financial markets
The Governing Council of the European Central Bank decided today to maintain the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on 26 June 2015 after discussing a proposal from the Bank of Greece.
ELA can only be provided against sufficient collateral.
The financial situation of the Hellenic Republic has an impact on Greek banks since the collateral they use in ELA relies to a significant extent on government-linked assets.
In this context, the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA.
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
According to Financial Times “two ECB governing council members opposed Greece’s haircuts adjustment and wanted tougher measures.”
Probably even higher haircut?
Hardly anyone was expecting that the ECB would increase ELA to Greek banks before the EU LEADERS Summit tomorrow Tuesday.
But “haircut on collateral”???
By financial editor Mehreen Khan of Telegraph
Despite people’s decision on Referendum, Greece’s lenders will still try anything to economically suffocate the country and the bring the government down to its knees.
The ECB board will convene again on Wednesday, after the EU Summit.
Meanwhile Payment agencies like Western Union have stopped accepting payments not only from but also to Greece with the effect the money collected for charitable purposes in Greece cannot be sent.
In a request KTG’s request to @Western Union, the payment agency replied:
@keeptalkingGR Hello. The system is down as per decision of bank of Greece, that established a bank holiday from the 28th June until the the 6th July. The bank holiday affects all banks, payment institutions (including the foreign ones operating in Greece), branches and representatives of payment institutions and electronic money institutions established in other Member States of the Union and operating legally in Greece. The above mentioned time period can be shortened or extended.