The Governing Council of the European Central Bank has decided to further lower the Emergency Liquidity Assistance (ELA) ceiling for Greece, the Bank of Greece said in an announcement, on Thursday. The new ELA ceiling now stands at 86.9 billion euros.
“The reduction of €1.0 billion in the ceiling reflects an improvement of the liquidity situation of Greek banks, amid a reduction in uncertainty, and the stabilization of private sector deposit flows,” the Bank of Greece notes.
The ELA ceiling for Greece has been constantly cut down since the beginning of September when the ceiling was 89.1 billion euros, in the aftermath of the new bailout deal that Greece and international creditors agreed to in August. The ELA ceiling to Greece in early August was around 91 billion euros.
Despite the decrease in the ELA ceiling, Greek banks are not quite safe yet. Capital controls that have been in place since late June still restrict liquidity, as fears of mass deposit withdrawals are still prevalent. A Greek bank recapitalization is expected to take place somewhere between November and December. The exact amount that the Greek banking system needs to recover has not been determined as of yet.
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