Greek banks look to ECB emergency liquidity

An embattled Tsipras managed to persuade the Greek parliament to agree to the latest bailout measures but is facing revolt from his own party [Xinhua]

All eyes are now on the European Central Bank (ECB) and whether it will allocate more emergency financial assistance to Greece’s cash-strapped banks.

The ECB is scheduled to meet later today to discuss the eurozone economy and how its quantitative easing program has performed since it was introduced in March.

But Greece will be at the top of the agenda now that the possibility of a Grexit has been significantly reduced.

The late Wednesday Greek parliament approval of the tough(er) austerity measures demanded by European creditors shifts the focus on rescuing the banking system which has in the past two weeks teetered on the verge of collapse.

The deal agreed by the Greek parliament is expected to facilitate some $95 billion in a new loan to keep the economy working.

But yet another loan deadline looms on the horizon – Greece must pay a $3.9 billion loan to the ECB by July 20.

The government of Prime Minister Alexis Tsipiras has to first open the banks and increase the amount of cash people can withdraw.

This had been limited at just below $70 during the referendum.

But questions remain about the level to which the ECB will go to immediately inject liquid funds into the Greek economy.

On June 17, the ECB increased the overall total emergency liquidity fund available for Greece from $94.3 to $95.4 billion.

When it meets today, it will have to decide whether it will lift the existing cap. Earlier in the week, the ECB decided to keep the cap in place, but that was before the Greek parliament caved in to European creditors’ demands.

Lifting the cap would provide a semblance of relief to local banks in Greece; the emergency liquidity fund has been their lifeline for the past six months.

In the meantime, Tsipras is facing open revolt from MPs in his own party. Former Finance Minister Yannis Varoufakis condemned the latest bailout agreement.

The BRICS Post with inputs from Agencies