ECB to fund Greek banks as long as they stay solvent: Coeure

Wed Apr 22, 2015 6:22am EDT
 
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ATHENS (Reuters) - The European Central Bank will continue to fund Greek banks as long as they stay solvent and have enough collateral, Executive Board Member Benoit Coeure told a newspaper on Wednesday, dismissing talk that Athens might ditch the euro.

Worries over the standoff between the leftist-led government in Athens and its creditors - the euro zone and the International Monetary Fund - over reforms needed to unlock bailout funds has sparked uncertainty and deposit flight from Greek banks.

They have been relying on emergency liquidity assistance (ELA) from the domestic central bank, drawn against collateral, as progress on talks remains painfully slow.

ECB staff have prepared a proposal to reduce the value of that collateral, a media report citing people with knowledge of the discussions said on Tuesday. The ECB declined to comment.

ELA funding drawn from the Bank of Greece hit 68.5 billion euros in March as Greek banks suffered deposit outflows of 24 billion euros from December through February.

"The current situation is clearly not sustainable and requires quick and decisive action by the Greek authorities to turn things around," Coeure told Greek daily Kathimerini.

Despite tangible progress in talks with the EU, the IMF and the ECB, he said significant differences remained and further work was needed.

Coeure said Greece leaving the euro was "out of the question".

Capital controls were also not a working assumption. "In any case, it would not be up to the ECB to take measures of that sort. Those fall within the competence of national authorities," he said.   Continued...

 
Benoit Coeure, member of the Executive Board of the European Central Bank (ECB), gestures during the session 'The Global Economic Outlook' in the Swiss mountain resort of Davos January 24, 2015.  REUTERS/Ruben Sprich