The Greek crisis is slowly subsiding with the country’s banks due to reopen Monday after the European Central Bank lifted the emergency funding limit by EUR 900 million for a week and the Eurozone officials agreed for a short-term loan to the crisis struck nation that aims for a bailout.
Since late June, Greece has had a bank holiday, with the daily withdrawal limit at ATMs set at EUR 60 a day. Despite banks set for opening Monday, it is likely that the cash withdrawals limit will only be eased gradually.
Deputy Finance Minister Dimitris Mardas said, “From Monday, the services offered will be widened. All the banks everywhere will be open. There might be a weekly limit on withdrawals, rather than a daily one. This is a proposal we are processing and we think it’s technically possible.”
In the meantime, it is expected that with the EUR 7 billion bridge loan as agreed in principle by the Eurozone finance ministers would be used by Greece to repay EUR 3.9 billion to the ECB as well as its missed payments to the International Monetary Fund.
The ECB’s Governing Council decided to raise the emergency liquidity assistance ceiling to Greece.
“Consequently, we expect that the ECB will continue to extend support via ELA emergency loans provided the negotiations are on track – without at the same time reducing the pressure on Greece by too much,” said Michael Schubert, Chief Economist at Commerzbank.
In a release after the conference call on Thursday, the Eurogroup reached a decision to grant in principle a 3-year European Stability Mechanism, or ESM, stability support to Greece, on the basis of a positive assessment by the institutions.
Upon the completion of the relevant national procedures and the formal decision by the ESM Board of Governors, which is expected by the end of this week, the institutions are likely to negotiate a Memorandum of Understanding (MoU) detailing the policy condition attached to the financial assistance facility.
“The Eurogroup calls on the Greek authorities to swiftly adopt the second set of measures by next Wednesday as foreseen in the Euro Summit statement, and update the legislation related to the first set of measures consistent with the recommendations made by the institutions,” the release showed.
The third bailout deal of EUR 86 billion needs to be approved by 18 national parliaments of the euro area before starting fresh negotiations.
On Thursday, Finland’s parliament approved providing an EU-wide loan to Greece. And it is expected that parliamentary approval from five countries – Germany, the Netherlands, Austria, Slovakia and Estonia – might be coming in on Friday.
The material has been provided by InstaForex Company – www.instaforex.com