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5 Feb 2015
Greek bank default risks ahead after ECB’s decision to curb liquidity – KBC
FXStreet (Barcelona) - According to KBC Bank, ECB’s decision to stop liquidity assistance to Greek banks increases the risk of a bank default and a possible Grexit.
Key Quotes
“Greek banks lost access to ECB liquidity and are now dependent on ELA-funding (Emergency Lending Assistance) with the Greek National Central Bank. It means the price of the liquidity is now 1.55% instead of 0.05%.”
“The ECB allowed a continuation of ELA, but that decision will be reviewed at the next council meeting (Feb 18).”
“Scrapping ELA would effectively lead to a default of the Greek banking system.”
“We consider the ECB decision as a first warning shot for the new Greek government that it needs to abide by EU rules. It raises the need to come to an agreement with Europe.”
“We suspect/fear that deposit outflow will now accelerate, which raises risks of a Greek bank default and a possible Grexit.”
“Pressure on Greece increases to reach a deal with Europe. Uncertainty and volatility in markets will remain high.”
Key Quotes
“Greek banks lost access to ECB liquidity and are now dependent on ELA-funding (Emergency Lending Assistance) with the Greek National Central Bank. It means the price of the liquidity is now 1.55% instead of 0.05%.”
“The ECB allowed a continuation of ELA, but that decision will be reviewed at the next council meeting (Feb 18).”
“Scrapping ELA would effectively lead to a default of the Greek banking system.”
“We consider the ECB decision as a first warning shot for the new Greek government that it needs to abide by EU rules. It raises the need to come to an agreement with Europe.”
“We suspect/fear that deposit outflow will now accelerate, which raises risks of a Greek bank default and a possible Grexit.”
“Pressure on Greece increases to reach a deal with Europe. Uncertainty and volatility in markets will remain high.”