“The European Central Bank will increase Emergency Liquidity Assistance for Greek banks today,” chief Mario Draghi said during a press conference on Thursday. The much expected decision comes after the ECB froze ELA on June 26th 2015 enforcing the Greek government and the Bank of Greece to impose bank holiday and capital controls thus creating an economic asphyxiation and fear among the citizens and depositors and paralyzing the market. The ELA increase comes after Greek Parliament approved the first set of ‘prior actions’ demanded by the country’s EURO-creditors and after the Eurogroup approved Thursday morning a bridge-loan of €7 billion so that Greece can meet its obligations to ECB and IMF in July. So you know where the bridge money will go…
Below Draghi’s statements on Greece and ELA via the official @ecb account:
Decision to raise ELA took today symmetrical to decision to freeze ELA.
The ECB continues to act in the assumption Greece is and will remain a member of the euro area.
Increased ELA 900 mln over one week.
Liquidity provisions have never been unconditional and unlimited.
Total exposure to Greece now 130 bn.
We acted always under the assumption Greece is a member of euro area.
The overall purpose of Eurosummit text was to ensure Greece will become a thriving economy.
Uncontroversial debt relief is necessary.
All recent developments are improving quality of collateral pledged by Greek banks.
Our mandate is to act based on the assumption that Greece is and will be a member of the euro area.
Capital controls have protected depositors.
On July 20 we will be repayed. [3.5bn] There are questions about implementation: will and capacity, up to the Greek Government to dispel these doubts
Suffering from extreme liquidity asphyxiation, the Greek government was put by its’ EURO-‘partners’ under immense pressure and public humiliation to accept the worst and strictest austerity package ever. PM Tsipras won the parliament voting in the early morning hours of Thursday but lost the support of 39 of his 149 SYRIZA lawmakers. A government reshuffle is expected mos probably today, it is not clear if the 39 ‘rebel’ MPs will remain in the ruling party.
However, most citizens are busy with the question: when will the banks open again.
The owner of a pet shop who sells only pet food and accessories was telling me that purchases dropped by 70% since the capital controls were imposed on June 29th. He suggested that pet owners would buy pet food from the supermarket and ‘stick to essential purchases.”
The majority of relatives and friends I spoke with have told me that they have not paid utilities, taxes or even rent in July. “I can’t pay bills.I withdraw my daily 50 euro and do only the very necessary purchases. And this is food.” Also another friend said “I buy only food and medicine for my father. Nothing else. I am not sure there will be money in the ATMs tomorrow.”
Fact is that money stays in the bank or in the wallets and does not circulate in the market. As we say in Greece “shortage of money brings commerce to rest.”
A Greek Finance Ministry decision is expected to be released later on Thursday, as the previous one on the bank holiday expires tonight. According to Greek media, it is more likely that banks will open again on Monday, July 20th 2015, the earliest. Capital controls are expected to continue, a slight rise in the ATMs withdrawal limit may be allowed.
PS Some people like Mario Draghi still claim that the ECB is independent…I was trying to call Merkel, Schaeuble and Draghi this morning but their lines were busy all the time.