Frankfurt / Main (dpa) – Europe’s monetary authorities are in a dilemma: Strictly speaking, the European Central Bank (ECB) emergency loans to Greece banks put a stop to. Because the money is going to the satisfaction of more and more experts basically in a bottomless pit, ailing banks would be kept artificially alive. However, the Governing Council would be to Fed President Mario Draghi also turn this money supply still threatens a wave of bankruptcies in Greece. Still flow the emergency loans, however, the Governing Council tightened on Monday evening the conditions.
What the ECB has been done to support Greece?
Even as the situation in the spring of 2010 came to a head for the first time , the ECB buying government bonds decided. Late last year, the ECB held out this SMP program nor Greek securities worth 18.1 billion euros. Even the extremely low interest rate in the euro area – by now it is 0.05 percent – to stimulate the economy. In addition, make Europe’s central banks to recent figures released to Hellas-banks currently 118 billion euros at its disposal so that they can finance the Greek economy. That is more than twice as much as the end of 2014, Draghi had said in mid-June in the European Parliament: “Currently the liquidity assistance is around 66 per cent of Greek economic performance and thus higher than anywhere else in the euro zone.”
Where the Greek banks currently get fresh money?
For months the banks of the heavily indebted country are mainly due to Ela-emergency loans (“Emergency Liquidity Assistance” / Ela) instructed. These are intended to be a temporary assistance basically healthy banks. Meanwhile Ela was but “become the only source of financing for banks,” said Bundesbank President Jens Weidmann. The nourishing doubts whether the Institute is basically at all be able to pay – a prerequisite for the grant of Ela-aids on the National Bank of Greece. On Monday evening, the Governing Council decided to leave the emergency loans to date of almost 90 billion euros. However, banks have more collateral for the same loan amount deposited as previously in the future.
Can the ECB emergency loans not just stop?
There would need in the Governing Council, a two-thirds majority. Resistance to the emergency loans that may flow only with the approval of the Governing Council, is growing. Stops the panel the Ela-aids, would the Greek banks to repay the billions granted. Then the collapse of the Greek financial system according to estimates by economists would no longer be avoided.
Why does the ECB Ela continue, despite growing criticism?
The de jure independent central bank will in the for months unresolved debt dispute not tip the scales. “You do not want to pull the plug as an institution with no direct democratic legitimacy,” write the economists of Sal. Oppenheim. The ECB is the “decision catalyst unwillingly” become. “For some time, it expands its mandate by maintaining the emergency care of the Greek banks if they do not want to jeopardize your long-term reputation, you can not let another bend Just as long as it still. views – however small – are on a political solution to the Greek crisis, they may grant emergency care “, according to this analysis. Economists Bankhaus Metzler believe the ECB will “increasingly becoming a key actor and therefore a political issue”.
Why are emergency loans actually so controversial?
Critics argue that Fed financiers in this way indirectly the Greek State, which is forbidden. The Bundesbank has already pointed out a few weeks ago that Greece’s banks buy with Ela loans largely new government securities with short-term maturity (T-bills). Many economists emphasize: Without Ela the Hellas-banks would be bankrupt long ago. Europe’s top Bankenabwicklerin Elke König said in mid-June the “Handelsblatt”: “For the Greek banks access to the market is now closed for a long time the border between Ela and wrongful is fluent..” Many experts believe it is problematic that the ECB is also responsible for overseeing the leading Greek banks.
How long can this go on with the Ela-emergency loans?
The vast opinion of observers is that the ECB will join the poker as long as there is the slightest chance for a political solution of the donors with the government of Alexis Tsipras. But the moment of truth is approaching: On July 20, Greece has to repay 3.5 billion euros government bonds held by the ECB. Without fresh billions should elapse without payment from Athens and this appointment. Then the Fed would be directly affected, and it was up to the question of a further grant of Ela loans also to the reputation of the independent central bank.
If Athens does not repay the 3.5 billion euros, this would be “really the case of bankruptcy “, the Austrian central bank chief Ewald Nowotny said on Monday evening in an ORF program. “In this situation, it would no longer be possible for the ECB to provide more liquidity.” The ECB would have to, in his view, the Ela-loans provide formal due – albeit with some periods for repayment
Francis Yared of Deutsche Bank also provides for July 20, even a back door. If the not pay Greeks, the ECB could give them a 30-day grace period for repayment -. and would thus itself again scope for further decisions
How could the ECB Greece still support
In the hindquarters, the central bank has its previously never occupied OMT program (“Outright Monetary Transactions “/ OMT) in the summer of 2012. At that time, the Governing Council decided against opposition from within its own ranks, the central bank will buy government bonds if necessary unlimited individual euro countries in order to save the euro. However, the ECB has imposed itself and Conditions for this program – including the fact that the ECB as part of OMT will act only if the country concerned with a euro bailout fund (EFSF / ESM) is hatched and must meet stringent reform requirements. This is in Greece to the previous bailout end of June expiry currently not the case. After all, the European Court of Justice (ECJ) gave in mid-June this year the green light for the OMT program.
ECB bond purchase program 01/22/2015
Time series key ECB interest rates
ECB bonds SMP program
Annual Results National Bank of Greece
agreement between EFSF and Greece
ECB to new bond purchase program PSPP
Opening Statement Draghi ECB press conference on 06/03/2015
ECB announcement on emergency loans for Greece 06/28/2015
Communication National Bank of Greece 29/06/2015
Information about emergency liquidity assistance (Ela)
ECB-buying programs
Notification ECB to Greek bonds from 4.2.2015
ECB volume of Greek bonds the end of 2014.
speech Weidmann amongst others to Ela 06/25/2015
S & P to Greece rating
S & amp; P Greece rating 06/10/2015
S & P to Greece Rating 29/06/2015
Fitch for credit rating of Greek banks
Moody’s to Greece rating
Statement Euro Group 06/27/2015
Explanation Euro Group 27.6. 2015
Citigroup to neologism “Grexit”
ECB to results Bank Stress Test 2014
Alpha Bank
Euro Bank
National Bank of Greece
Piraeus Bank in Germany
speech Draghi European Parliament 15/06/2015
Statement Euro Group – English
Explanation Euro Group
Draghi’s speech to the euro rescue 26.7.2012
ECB OMT program 6.9.2012
Notification Federal Constitutional Court 07/02/2014
ECJ to OMT judgment 16/06/2015
ECB announcement to Ela 06/07/2015
Interview Nowotny in ORF 06/07/2015
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