Greece did not request a further increase in Emergency Liquidity Assistance (ELA) from the European Central Bank on Wednesday, in a sign Greek banks are not burning through cash as fast as previously feared, sources familiar with the situation said.
The ECB, which increased ELA by 900 million euros in each of the past two weeks, kept its cap at around 91 billion euros on Wednesday after the Bank of Greece defied some expectations and did not request another increase, indicating that banks are maintaining a cash buffer.
“This is a positive sign for the Greek economy and the domestic lenders,” a senior banker at a private Greek bank told Reuters. “Greek banks have an ample cushion of liquidity for the moment. The real test will come when the government decides to relax the restrictions on capital controls.”
Limiting withdrawals to 420 euros per week, Greece has prevented an exodus of cash from its banks and the bailout deal with international lenders worth up to 86 billion euros is expected to shore up confidence in the ailing bank sector.
But capital controls may need to stay in place until a bailout package is finalised, now scheduled for late August, and banks get at least the first part of the 25 billion euros earmarked for their recapitalization.
Hoping to continue normalization, Athens is working to reopen its stock market with some restrictions after a month-long shutdown.
The ECB raised the cap on ELA by 900 million euros last week to almost 91 billion euros and sources then expected continued incremental increases.
Source: Reuters (Reporting by Balazs Koranyi and Lefteris Papadimas; Editing by Francesco Canepa and Hugh Lawson)