European Central Bank (ECB) Vice President Vitor Constancio declared earlier today that a decision on whether Greece will receive emergency funding will be tabled to the bank’s upcoming Governing Council meeting. According to Reuters, Constancio said that ECB’s Emergency Liquidity Assistance (ELA) was an alternative to its regular funding, but its provision must be approved by the bank’s 25-member Governing Council. It should be noted that the ELA was designed as a barrier for banks facing temporary liquidity problems. “There is the possibility of so-called ELA. In any case that will be ultimately a decision of the Governing Council, which I don’t want to predict at this stage,” he said while on a Q&A session at Cambridge University. The leftist SYRIZA electoral victory has sparked worries to the Eurozone. The joint currency member-states appeared worried over Greece’s determination to end its current rescue program – signed by the previous Greek government – and was increased by recent reports of an outflow of money out of Greek banks. The worst case scenario for Greek banks would be the country’s withdrawal from its program, as they would not be able to rely on the ELA. As Reuters highlighted, ECB currently allows them to swap junk-rate Greek government bonds for standard funding only because the country is in a repair program. At the same time, other ECB officials appear to have a different approach than the one expressed by Constancio. Speaking on Finnish TV, Finland’s ECB representative Erkki Liikanen expressed a more radical opinion, saying that the bank should stop assisting Greek banks if Greece’s bailout deal – which is due to the end of February – is not extended. “We have our own legislation and we will act according to that… Now, Greece’s program extension will expire at the end of February so some kind of solution must be found, otherwise we cannot continue lending. I do not believe that one can hide from economic realities,” he characteristically said.
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