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ECB Lowers Emergency Liquidity Assistance to Greece

The Bank of Greece announced that the European Central Bank had lowered the cap on emergency liquidity assistance (ELA) that Greek banks draw from the domestic central bank by 4.4 billion euros to 52.8 billion euros ($59.6 billion). The Greek central bank’s statements on Thursday was welcomed as a move that reflects improving liquidity conditions in Greek banks.
Greece also views the lowering of the ELA cap as a response to the stabilization of private sector deposits.
The ELA ceiling will stop being valid on September 21. The reliance on ELA since February 2015 came following Greece’s expulsion from the ECB’s funding window. Emergency liquidity has cost Greece more than direct ECB borrowing would have at a time when it needed it most. In June, the situation bettered when the ECB reinstated Greek banks’ accessibility to cheaper funds, allowing Greece to reduce its dependence on the ELA lifeline.

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