ECB: walking a tight rope – ING

FXStreet (Guatemala) – Analysts at ING Bank explained that following the victory of the “No” vote in Greece’s referendum, the ECB decided to continue providing Greek banks with access to Emergency Liquidity Assistance (ELA).

Key Quotes:

“The haircut on collateral was nonetheless adjusted to take into account the deteriorating of financial situation of the Hellenic state and banks. The size of the tightening move was not revealed but the fact that the liquidity ceiling was maintained at the same level suggests that it won’t significantly deteriorate the liquidity position of the Greek banking sector in the very short term.”

“The ECB is once again walking a tight rope, wanting to limit its influence in the political arena while at the same time trying to preserve its credibility. The ball is now in the politicians’ court. The next deadline is approaching quickly with the repayment of EUR 3.5bn in Greek bonds due to the ECB on 20 July. In case of a default, things would become much more complicated for the banking sector, but it would not necessarily imply the end of ELA financing.”

Analysts at ING Bank explained that following the victory of the “No” vote in Greece’s referendum, the ECB decided to continue providing Greek banks with access to Emergency Liquidity Assistance (ELA).

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