FRANKFURT—The European Central Bank on Wednesday maintained its
limits on emergency loans to Greek commercial banks, an ECB
spokesman said, a decision that likely will keep capital controls
in place at least through Sunday's referendum on the country's
willingness to meet creditor demands.
The ECB also made no changes to the amount of collateral banks
must post to obtain the liquidity although the topic was discussed,
according to a person familiar with the matter, a day after Greece
defaulted on â,¬1.55 billion ($1.72 billion) it owed the
International Monetary Fund and the country's bailout program
expired, leaving Athens with no outside support.
On Sunday, the ECB froze emergency liquidity assistance, or ELA,
at around €89 billion after letting it climb steadily in recent
months after Greek government debt was in February shut out as
collateral for standard ECB lending facilities that carry a lower
interest rate than ELA.
The decision at a meeting Wednesday of the ECB's governing
council largely keeps Greek banks in limbo: They can't borrow
additional central bank money to finance deposit outflows; but they
won't have to repay the existing stock of loans either. Greek banks
have been closed since Monday, and ATM withdrawals are limited to
€60 a day.
It also underscores how loathe ECB officials are to making any
decisions that would upend the political process as it reaches its
decisive phase. Greek voters are due to vote July 5 on whether to
accept a recent proposal by the institutions overseeing the
country's now-expired bailout—the ECB, IMF and European
Commission—or reject it as the left-wing government has urged.
Greek Prime Minister Alexis Tsipras has said a vote against the
proposals would strengthen his hand to wrangle a better deal from
Greece's creditors, while opposition parties and politicians
elsewhere in Europe have cast the vote as a yes or no on Greece
staying in the euro.
The ECB will come under more pressure to review its stance on
ELA after Sunday's referendum. If Greek voters reject the
creditors' proposals, then the central bank could face calls to
curb ELA or end it outright.
Even if Greeks vote yes Sunday, the ECB faces a number of
hurdles before it can turn the lending spigots back on, most
notably the more than €3 billion that Greece must pay the ECB on
July 20 to redeem bonds held by the central bank.
Analysts say it would be hard for the ECB to keep ELA going if
Greece defaulted on this payment.
Write to Brian Blackstone at brian.blackstone@wsj.com
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