
Greece debt crisis: ECB 'to end' bank emergency lending - YPetrov
http://www.bbc.co.uk/news/world-europe-33303105
======
randomname2
ECB statement:

ELA to Greek banks maintained at its current level

\- ECB takes note of decision on Greek referendum and the non-prolongation of
the EU adjustment programme

\- ECB will work closely with Bank of Greece to maintain financial stability

\- Emergency liquidity assistance maintained at Friday’s (26 June 2015) level

\- Governing Council stands ready to review decision

\- Governing Council closely monitoring situation and potential implications
for monetary policy stance

The Governing Council of the European Central Bank today welcomed the
commitment by ministers from euro area Member States to take all necessary
measures to further improve the resilience of euro area economies and to stand
ready to take decisive steps to strengthen Economic and Monetary Union.

Following the decision by the Greek authorities to hold a referendum and the
non-prolongation of the EU adjustment programme for Greece, the Governing
Council declared it will work closely with the Bank of Greece to maintain
financial stability.

Given the current circumstances, the Governing Council decided to maintain the
ceiling to the provision of emergency liquidity assistance (ELA) to Greek
banks at the level decided on Friday (26 June 2015).

The Governing Council stands ready to reconsider its decision.

Mario Draghi, ECB President, said: “We continue to work closely with the Bank
of Greece and we strongly endorse the commitment of Member States in pledging
to take action to address the fragilities of euro area economies.”

Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece,
as a member of the Eurosystem, will take all measures necessary to ensure
financial stability for Greek citizens in these difficult circumstances.”

The Governing Council is closely monitoring the situation in financial markets
and the potential implications for the monetary policy stance and for the
balance of risks to price stability in the euro area. The Governing Council is
determined to use all the instruments available within its mandate.

[https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.e...](https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en.html)

~~~
debtopolis
The Greek version of monopoly - they cleaned out the bank early, and everyone
loses (game over!)

~~~
randomname2
The ELA freeze was for Sunday. It will be reviewed on a daily basis.

------
elmar
They have to impose capital restrictions fast...

What Would Greek Capital Controls Look Like?

[http://www.bloomberg.com/news/articles/2015-06-01/how-
greek-...](http://www.bloomberg.com/news/articles/2015-06-01/how-greek-
capital-controls-would-work-if-deadlock-persists-q-a)

~~~
chkuendig
Varoufakis apparently told BBC that the banks might stay closed tomorrow and
that capital controls could be imposed.

[http://twitter.com/suttonnick/status/615112479828348928](http://twitter.com/suttonnick/status/615112479828348928)

edit: scratch that.
[http://twitter.com/yanisvaroufakis/status/615127339102531584](http://twitter.com/yanisvaroufakis/status/615127339102531584)

~~~
elmar
Not imposing capital restrictions is suicide, i don't know if Yanis varoufakis
is an economical genius a madman or simply amateurish.

~~~
dghughes
Alexis Tsipras is genius the referendum means he doesn't have to do his job.

He can just say "See you all decided not me."

~~~
jedmeyers
It's his actual job - to represent and follow the opinion of the people. It's
called democracy. And if the opinion of the majority is wrong, then, in this
case, so be it.

~~~
makeitsuckless
He's not a representative, he's an administrator. Representing the people is
the job of parliament, _his job is to lead_. He cannot just switch sides
whenever it suits him.

We have all of these safeguards in place to ensure our leaders neither go off
the rails completely, nor simply follow the popular opinion du jour with the
predictable disastrous consequences.

If we would do that in the rest of Europe, aid to Greece would have stopped a
long time ago.

~~~
xkarga00
Well, it should have stopped a long time ago... Or to be more accurate,
financial help should never happen in the first place. But that's another long
story.

------
lifeisstillgood
tl;dr ECB has leaked to BBC they will cut off emergency lending that covers
the panic withdrawals. This will kill the deal and force a grexit, even before
5 July referendum. However French PM does not think they have enough
independence to do that.

So we have a democratic nation potentially forced to leave Euro, after
democratically deciding it no longer wants the austerity imposed, being forced
to leave by non democratic ECB while the democracies that appoint the ECB
think it is going too far.

What's that quote from Hunt For Red October - "with all these planes in the
sky, it's only a matter of time [before we start a war]"

The lesson for democracy - force governments who are going to adjust fiscal
measures past a certain point to get referendum approval

\- and look how well that works in California...

~~~
drited
What's the alternative for the ECB? Give €129 bn to Greek banks to replace the
deposits that are bound to flee this week only to see it lost when they
default after saying no in the referendum? The Greek banks would have been
bust long ago if it wasn't for the ECB's emergency lending; they've been
provided with €60 bn in liquidity over the last 6 months to replace the
deposit flight. Not sure how you can characterise that as Greece being forced
to leave by a decision from the ECB. Looks more to me like they have to leave
because there are no other options left.

~~~
harywilke
The alternative is to start investing in Greece. To build up it's economy so
we can end the Greek Depression. As it stands now the austerity packages have
cut 30% off of the economy and increased the unemployment rates to nearly 30%,
50% of the youth. Those are Great Depression size numbers. Hard to collect
taxes when people are not working. All these bailouts are basically just the
Troika hand wringing about giving money to themselves while the country they
are helping is bled dry. To date the IMF have made about 2.5 Billion, Germany
profited to the tune of 100 Billion.

~~~
drited
I asked what the alternative for the ECB was and you suggested the alternative
was to invest in Greece. Are you suggesting that the ECB should invest in
Greece to build up its economy or are you conflating my question regarding
what the alternative for the ECB was with a question which I did not ask
regarding what European institutions in general should do?

~~~
lifeisstillgood
To roughly answer the above questions - the ECB and IMF need to stop. This is
above their pay grade.

This is a problem caused by a fixed exchange rate (single currency) at the
wrong rate for Greece and co. Without a mechanism to adjust prices for
differences in cost and productivity Euros looked really cheap to borrow from
germane but olive oil looked really expensive to buy in. (Germany presses and
bottles and exports more olive oil from Greek olives than Greece does)

The only way to solve the problem long term is to move the money from richer
(urban) parts of Europe to poorer rural parts. Stupid ideas like the CAP don't
really help. Redistributive taxation across Europe (ie Federal taxes and
Federal government) are the next step. But that is waaaaay out of the ECBs
remit.

Syriza is basically saying - fine break my legs, but only if you can promise a
European wide discussion on how we got into this mess and what a federal
Europe will look like

------
jkot
There were similar leaks from ECB to force Irish to take bailout. Anyway we
will see on monday, right now some ATMs in athens are still working.

~~~
lmb
Since this is [citation needed] I dug around. Seems like yes, the ECB
pressured Ireland into accepting a bailout by threatening them to shut down
ELA. But in fact they did it in a secret letter from Trichet to the then
finance minister. Getting that letter released took some pressure, as well.
[0][1]

So, the only similarity seems to be the ECB threatening to pull ELA. There has
alreay been debate that the ECB is already overstepping their mandate, but I
can't find an English source for that.

0: [http://www.irishtimes.com/business/economy/o-reilly-hits-
out...](http://www.irishtimes.com/business/economy/o-reilly-hits-out-at-ecb-
for-lack-of-transparency-on-irish-bailout-1.1716321)

1:
[http://www.bbc.co.uk/news/business-29942060](http://www.bbc.co.uk/news/business-29942060)

~~~
jkot
My source is former Irish financial minister talking at parliamentary
commission, which investigated crisis, a few months ago. Dont really remember
details.

------
DanielBMarkham
They say that newspapers readers and television viewers love a train wreck, a
situation where everybody knows very bad things are coming and we all pop the
popcorn and watch. It's a sad reflection on human nature, but audience numbers
prove it out.

But wow, the Grexit is painful even when put into the train wreck category.
It's going on and on, and the invective, hate, and hard feelings linger and
fester. The amount of misery this has produced seems vastly out of proportion
to the incident itself. I wonder if severe, immediate action taken at the
beginning of the crisis wouldn't have resulted in something much less painful
than this. 25% shrinkage in the economy and _then_ massive bank closings? Good
grief. It's becoming reminiscent of post WWI Germany.

------
dataker
>after five years of lender-imposed austerity that has increased Greek
unemployment

That's a very easy target. Probably easier to ignore the high cost of hiring,
bureacracy, corruption,...

------
sambe
Several people are interpreting "stays the same" as good news for Greece and
contrary to the article. I interpret it as the opposite: it will not expand
further to meet the demand, thus Greek banks will run out of money. I didn't
have the impression anyone expected the full amount to be recalled.

~~~
randomname2
The article was incorrect by stating ELA would be "turned off", as it will
merely be frozen, or at least the ECB is saying so.

However if the ECB follows through on this, the end result may be the same and
it's only a matter of time before the entire ELA bailout is unwound like in
Cyprus.

~~~
sambe
The article seems a little confusing/confused but not strictly incorrect.
There is no statement that the full amount would be recalled. The value of ELA
has effectively become the extensions - the newly-lent money is being
withdrawn daily. "Ending" this and refusing increase the limit could be
considered the same.

------
the-dude
Just now : ELA continued :
[http://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en...](http://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en.html)

~~~
jpmattia
The title is not particularly clear. "Continued" means that the ELA is
maintained at the current level.

Put another way, there will be no further increase in ELA and the Greek banks
have used the previous allotment, so their coffers are running dry. It will be
a very tough week in Athens.

------
randomname2
The BBC should know better than this, using "unnamed sources" to quote a
rumour as fact.

No decision has been made yet, so this is just misinformation. Expect more of
this over the next days.

~~~
raesene9
Unfortunately this is extremely common in many countries where politicians and
civil servants want something out without having it tied to them.

If you've been following the greece coverage, there's been lots of documents
leaking from various sources on both sides of the negotiations. Last week when
the initial greek proposal and the IMF "red-lined" version were in discussion,
both were leaked on the day...

~~~
peteretep

        > in many countries where politicians and civil servants
        > want something out without having it tied to them
    

I wonder if there are any democracies where this mechanism _isn 't_ used

------
MichaelMoser123
What kind of capital controls? in this situation it is quite an oxymoron. With
a different currency you can control the exchange rate or limit how much one
is allowed to exchange, however Greece still has the same internal currency -
the Euro. You don't have a Greek euro only - its the same currency.

To me all these conflicting reports smell like panic; decision makers just
don't know what to do now, and the BBC does not know what to report. Sounds
like 2008 all over again.

~~~
pjc50
Cyprus imposed capital controls while remaining in the Euro. Restrictions on
bank transfers and cash crossing the border.

~~~
MichaelMoser123
interesting. Now how is the economy supposed to function with limitations on
bank transfer? Wouldn't that make it difficult to repay debt?

~~~
pjc50
Lots of paperwork, I think. Every non-trivial transfer requires approval.
Here's how it used to work in the UK until 1979:
[http://www.bankofengland.co.uk/archive/Documents/historicpub...](http://www.bankofengland.co.uk/archive/Documents/historicpubs/qb/1967/qb67q3245260.pdf)

Edit: yes, this makes commerce difficult. A finance correspondent I follow on
twitter says to expect petrol rationing.

------
estefan
And now it will continue:

[http://www.bbc.com/news/world-europe-33304674](http://www.bbc.com/news/world-
europe-33304674)

------
jacquesm
Flagging this, way too much un-informed nonsense in this thread, lots of heat
and little or no light.

------
themartorana
As I understand it, one of the major underlying issues this whole time (aside
from the silliness of trying to integrate Greece's economy with Germany's) was
the ECB's refusal to act as the lender of last resort. This seems like an
affirmation of that.

If Greece exits the Euro, I wonder if that will embolden other countries to do
the same.

~~~
mafribe
The ECB has _effectively_ acted as a lender of last resort to Greece for a
looong time (just look at ELA [1] for example), although for political reasons
this fact has been sugar-coated so as not to scare the electorate in states
that pay for Greece (and are now beginning to see what has been clear to
anyone who looked at the figures, namely that the money is gone!). Greece was
effectively bankrupt years ago. The main underlying issue is that Greece has
been unable or unwilling (depending on whom you ask) to ensure that tax
revenues roughly match government expenditures.

[1]
[https://www.ecb.europa.eu/mopo/ela/html/index.en.html](https://www.ecb.europa.eu/mopo/ela/html/index.en.html)

~~~
themartorana
But there aren't many countries in the First World that run revenue neutral or
better. The U.S. certainly doesn't, and most countries with fiat currencies
and their own central banks don't. I realize it's "possible" in the broad
sense, but Germany aside, it's a big ask of Greece (and austerity thus far has
done about bupkis to actually deal with the fallout of the financial crisis).

------
zapdrive
Its times like these that I seriously consider buying more bitcoins. Capital
controls are totally unjust, in a free country. And it can happen in any
country. The governments need to get their act together, instead of punishing
innocent citizens. Why does a centrally controlled currency even need to exist
in the first place?

------
imaginenore
It's about time. Greece has been behaving like a gambling addict, asking for
money to repay the old debts only to waste them in expensive restaurants,
buying iPhones, and gambling even more.

~~~
TazeTSchnitzel
Gambling addict? What an incredibly unfair and childish characterisation.

Greece is not a person, Greece is a nation state. It has implemented severe
fiscal cutbacks after being forced to by its creditors. Cutbacks which have
ruined the country's economy, massively increased poverty, and made it more
difficult to pay back its debts.

Now its people have voted in a government that wishes to make different
reforms. Ones that also keep the book balanced, but do not hurt the weakest in
society as much or destroy economic productivity.

~~~
jeroen94704
While I am certainly sympathetic to the Greeks for the hardships they have
faced and will undoubtedly face in the years to come, it is incredibly unfair
to deny the Greeks' own responsibility in all this.

This entire mess started with Greece not having its finances in order, and
essentially lying about this for years to the rest of the Eurogroup. After it
became clear how dire the situation was, the Eurogroup stepped in and helped
Greece by giving them money (LOTS of money). Had the Eurogroup not done this,
Greece would have defaulted on its debts years ago, and the country would have
gone bankrupt.

Now if someone offers to help you by giving you money, provided you meet
certain conditions, you can either accept and comply with the conditions, or
you can refuse. The fact is that Greece gladly accepted the billions upon
billions of euros, and the conditions that money came with.

I am fully aware that the measures demanded by Greece's creditors are tough.
Some would say it is doubtful whether they are actually effective at all. And
the demanded measures are certainly driven partly by political motives. All
this is true.

But it is mind-boggling to me that after the Eurogroup provided several
hundred billion euro's in aid to Greece, anyone would turn around and claim
the current crisis is in no way the Greeks' own fault.

~~~
aikah
> While I am certainly sympathetic to the Greeks for the hardships they have
> faced and will undoubtedly face in the years to come, it is incredibly
> unfair to deny the Greeks' own responsibility in all this.

Nobody is denying that fact. But it seems you are forgetting that Greece made
a lot of tough decisions for its people when asked by its creditors to
"reform" yet it is just not sustainable, it's like asking the greeks to commit
suicide.

> and essentially lying about this for years to the rest of the Eurogroup

And who do you think helped cook the books? Goldman Sachs

If a country gets out of the Euro, it will set a precedent and other countries
might do that in the future. The euro is an insane experiment anyway. It
cannot work. Too many structural and economical differences between euro
countries. UK was smart enough not to get into that mess. It seems that the
only country really profiting from this is Germany. While they are obviously
not responsible for that mess , there is a lot of resentment against Germany
in southern European countries and France. For these countries the Euro is
just the Deutsche Mark 2.0.

~~~
smhg
> And who do you think helped cook the books? Goldman Sachs

Did GS get any "punishment" for this? And does this take away all guilt from
Greece?

> The euro is an insane experiment anyway. It cannot work. Too many structural
> and economical differences between euro countries.

As someone without an economics background, I'm interested to know what these
insurmountable differences are?

~~~
pgeorgi
> Did GS get any "punishment" for this?

I guess the punishment is that former GS executive Mario Draghi now runs the
ECB.

