Troubled Greek banks tap emergency funding
Duncan Richardson, News Editor
4 Feb 2015, 11:35 a.m.
Three of Greece’s largest banks have started to tap emergency funding from the Central Bank of Greece in response to customers withdrawing their money due to the political uncertainty following Syriza election win last week.
Greek financial institutions have come under increasing pressure after Prime Ministers Alexis Tsipras stormed to power on a pledge to end austerity and renegotiate the countries massive debts.
Liquidity started to tightened prior to the election which prompted the Greek Central Bank to apply for emergency funding from the ECB. Initially the funding was only meant to be in place for two weeks.
Sources close to the matter have confirmed the banks have so far borrowed 2 billion euros since the liquidity was approved on the 21st of January. Central Banks are only allowed to lend to commercial banks if approval is given via the ECB.
The Bundesbank has concerns that emergency funding could be used to help cover the government’s short term borrowing needs. Some worry if a compromise can’t be found between the newly elected government and the ECB, Greece may leave the Eurozone.