Greek debt crisis: ECB raises emergency liquidity and pushes for debt relief - as it happened

Nick Fletcher (until 12.30pm) and Graeme Wearden (

from on 2015-07-16 18:31 (#EFNA)

The European Central Bank has provided more liquidity to Greece's banking sector, after the Athens parliament approves bailout deal

7.34pm BST

Almost forgot. Here's the other news story of the night:

7.31pm BST

That's probably all for today. An earlier finish than in recent weeks, as the Greek crisis becomes a little calmer....but nowhere near a resolution, of course.

But for now, we'll take the early cut.

7.20pm BST

Greece's banks will stay closed until the close of play on Sunday, the finance ministry just announced.

That tees up the possibility of reopening on Monday, with limited services, if a bridge loan for Greece is signed and sealed on Friday (as seems likely).

#Greece MoF said bank holiday extended until Jul 19. #economy #ecb #ela #banking

7.16pm BST

A couple of late photos: Angela Merkel and Wolfgang Schiuble at a meeting with their party MPs this afternoon, ahead of tomorrow's vote on whether to open talks on a third Greek bailout:

7.05pm BST

Over in Berlin, Wolfgang Schiuble has told German MPs that the International Monetary Fund won't be involved in the first bailout payment to Greece.

He made the comments in a letter, ahead of Friday morning's Bundestag debate on the Greek deal.

That tranche is due to be paid in mid-August 2015, according to the letter, seen by Reuters, in which Schaeuble requested that parliament agree to open talks on a third Greek bailout.

The letter said the IMF would make its further involvement dependent on a successful conclusion of the first programme review in autumn 2015 and a confirmation of Greece's debt sustainability.

These quotes kind of sums up Greece really http://t.co/wTd1tiDSpA pic.twitter.com/oMEgVGaJOG

6.31pm BST

As we flagged up yesterday, the UK government has succeeded in indemnifying itself against potential losses from Greece's bridging loan.

"We have today secured a significant victory and strengthened the protections for the UK in the latest Greek bailout and any future bailouts of Eurozone countries."

Osborne says UK contribution to Greek loan will be fully protected http://t.co/yMovagFS2t

5.54pm BST

European stock markets ended the day strongly, as investors reacted to signs that the Greek crisis was easing, for now at least.

The main indices all finished higher, with European markets hitting their highest level since late May.

The ECB's willingness to raise the ceiling on the ELA puts to bed the immediate risk of a banking collapse and paves the path towards the reopening of Greek banks and the eventual end to capital controls.

Mr Draghi saying that the need for debt relief in Greece is "uncontroversial" puts the ECB's stance on the issue alongside the IMF. It increases the odds of a more substantial haircut than has been admitted by Eurozone finance ministers.

5.26pm BST

4.52pm BST

Over in Athens, Alexis Tsipras has been meeting with key aides this afternoon, plotting his next move.

A government minister says that a reshuffle won't be announced on Thursday, though.

Greek gov reshuffle won't be announced today. Courage to all colleagues there..#Greece #Agreekment https://t.co/HQ79bq4Ut0

4.35pm BST

Hallo..... German tabloid Bild is reporting that senior social democrat Peer Steinbri1/4ck will vote against the Greek bailout package on Friday morning.

Thats big news: Ex-SPD-chancellor-candidate @peersteinbrueck will vote NO tomorrow in german parliament @BILD #grexit http://t.co/wN9DsyAMWz

Steinbri1/4ck no longer has skin in game politically and seems to genuinely believe #Grexit best scenario for Greece as will mean debt relief

4.24pm BST

Here's some required reading before tomorrow's vote in the Bundestag on the new Greek bailout package.

Ji1/4rgen Habermas, one of Germany's leading intellectuals, has heavily criticised Angela Merkel for her handling of the Greek crisis.

"Forcing the Greek government to agree to an economically questionable, predominantly symbolic privatisation fund cannot be understood as anything other an act of punishment against a leftwing government."

4.09pm BST

The ECB's decision to pump another a900m of emergency liquidity into the Greek banking sector means banks could open next week, after a three-week hiatus.

"They will open on Monday."

3.23pm BST

A vintage performance by the European Central Bank governor there.

I did not expect the #ECB to raise ELA for #Greek banks already today. The decision shows willingness to support a fragile process #Greece

"It's uncontroversial that debt relief is necessary and I think that nobody has ever disputed that. The issue is what is the best form of debt relief within our framework, within our legal institutional framework.

I think we should focus on this point in the coming weeks."

"continues to act on the assumption that Greece is and will ... remain a member of the euro area."

Shorter Draghi; Thank God you've got me and not one of those other clowns. I will cut you though

2.38pm BST

Another tantalising development.... Draghi hints that Greece could soon benefit from the ECB's quantitative-easing scheme, if it delivers on what's been demanded.

#ECB's Draghi: Greek QE eligibility depends on debt rating. Greek ECB repayment would leave room for QE purchases.

#Draghi: If SMP bonds re-payed on Monday, #Greece will become QE-eligible. BUT #ECB can't purchase without good implementation of program.

2.30pm BST

Draghi also gives Alexis Tsipras a nudge:

Draghi: There are questions about implementation: will and capacity, up to the Greek Government to dispel these doubts

2.29pm BST

How can the European Central Bank be so confident, given that prime minister Alexis Tsipras says he doesn't believe in the bailout deal?

Draghi knocks this one out of the ground, in a manner that would have been applauded at the other ECB.

2.25pm BST

Was the decision to give Greece more emergency liquidity unanimous?

Draghi claims that such decisions are never unanimous, as it takes a two-thirds majority to reject a request from a national bank.

Decision not to object to BoG was approved, question of unanimity irrelevant, Draghi says. (*cough* Weidmann *cough*)

2.22pm BST

Draghi says the ECB didn't take a decision on the ELA haircut (which is applied to the assets provided on Greek banks when they get emergency liquidity).

2.18pm BST

Draghi's confidence on getting repaid on Monday means he is certain that Greece will get its bridging loan in time.

2.17pm BST

What will happen if Greece defaults on the ECB on 20 July?

My information is that repayment will be met, and the IMF repayment too. So that is off the table, Draghi replies.

#Draghi: all my evidence leads me to say we will be repaid as well as the IMF, so that is off the table

2.14pm BST

Draghi also reveals that the ECB will change the way that ELA changes are announced. Currently they are not, but leak out to journalists.

That's going to stop, now that we're dealing with a systemic, macroeconomic problem.

2.12pm BST

When will the Greek banks reopen and operate normally?

It would be good to reopen them soon, Draghi agrees. It's a decision for the Greek government.

2.10pm BST

What's Draghi's take on Wolfgang Schiuble's idea that Greece could temporarily leave the eurozone?

I am not going to comment on politician's statements. I only know our mandate, says Draghi, which is to work on the assumption that Greece is and will remain a member of the eurozone.

2.08pm BST

Is a a900m increase in ELA enough to help Greece? Will cash machine withdrawals remain at a60 per day?

Draghi rejects the suggestion that he's being stingy with Greece - we have "completely and fully" satisfied the Bank of Greece's request (although adjusted to one-week, so the ECB can see how the situation develops)

2.07pm BST

Draghi: "It's uncontroversial that debt relief is necessary.the issue is what's the best form of debt relief. I think we shld focus on this"

2.05pm BST

Debt relief for Greece is "necessary", Draghi continues. No-one has ever disputed that.

But the question is how we do that in our institutional framework.

Mario Draghi says it's uncontroversial debt relief is necessary in Greece. Yes from an economist's perspective. Not a (German) politician's

2.02pm BST

What's Draghi's view of the Greek bailout deal?

Draghi points to the structural reforms in the package - they could help Greece become a thriving member of eurozone over time.

2.01pm BST

#Draghi mounted a pretty staunch defence of the ECB role in providing ELA to #Greece there.

2.00pm BST

Have you let Greece down?

Mario Drahghi says he finds such criticism quite "unwarranted".

Draghi says those wanting to cut ELA (*cough Weidmann*) did not respect ECB mandate and wanted to decide who is or is not in euro

1.55pm BST

Draghi confirms, extremely casually, that the ECB has raised Greece's emergency liquidity limits by a900m.

That's a small increase -- it won't allow capital controls to be lifted.

1.52pm BST

And has talk of temporary Grexit opened the Pandora's Box?

It's not up to us to decide who should be in the eurozone, Draghi replies. We work on the assumption that Greece is a member, and will continue to be.

1.52pm BST

Onto questions....and the first one is about Greece (quite right too).

Will the short-term bridging loan be enough to restore emergency liquidity to the Greek banking sector?

This restores the conditions to a raise in the ELA.

Draghi: Decision to raise ELA took today symmetrical to decision to freeze ELA

ECB raises ELA for Greek banks, Draghi casually mentions in press conference.

1.45pm BST

Nothing about Greece yet...

1.44pm BST

Draghi is taking some time to explain that Loan dynamics continued to improve, but are still subdued -- such as the flow of loans to companies.

1.41pm BST

Draghi cites emerging markets as a threat to the eurozone economic outlook:

Draghi says the ongoing slowdown in EM economies weighs on outlook @ecb @CNBCWorld #ECB

Draghi: Downside risks have been generally contained. #hawkishish

1.39pm BST

We would use "all instruments available" if we saw that an "unwarranted tightening of monetary policy" was taking place, says Draghi firmly.

That's a warning shot at the markets:

Think that Draghi just said: forget about tapering, our bazooka remains loaded and we will use it until the very end. #ecb

1.36pm BST

Draghi runs through his introductory statement following today's meeting.

He confirms that the ECB left rates unchanged.

Draghi: The ECB's monetary policy stance remains accommodative.

Draghi: Market-based inflation expectations have, on balance, stabilised or recovered further since our meeting in early June.

1.33pm BST

After some toe-tapping hold music, Mairo Draghi has arrived.

1.28pm BST

You can watch the ECB press conference live here.

1.27pm BST

It's nearly time for the main event of the afternoon - Mario Draghi's press conference.

12.58pm BST

Despite last night's vote, the Economist Intelligence Unit reckon this latest bailout deal is domed:

3 reasons Greek deal wont work: i) debt sustainability unaddressed; ii) GR cant implement, iii) neither side is taking political ownership

12.49pm BST

Here comes the European Central Bank's decisions....

And to no-one's huge surprise, they have left interest rates across the eurozone unchanged.

#ECB leaves rates unchanged http://t.co/hqOZBDSNfW

12.26pm BST

Here's the Agence-France Presse report on the EU believing last night's vote met the bailout conditions:

A Greek parliament vote satisfies the initial terms of a reforms-for-bailout deal between Greece and its EU creditors agreed at a 17-hour summit earlier this week, an EU spokeswoman said Thursday.

"The authorities have legally implemented the first set of four measures agreed at the eurosummit in a timely and overall satisfactory manner," spokeswoman Annika Breidthardt told reporters.

12.22pm BST

Meanwhile, more concerns from Germany:

Economic Committee of Merkel's CDU party: third Greek ESM bailout "has been exposed as wishful thinking by the IMF" https://t.co/xRtXSRWZV4

12.12pm BST

Despite the Greek vote avoiding an immediate default, there are still considerable risks ahead, according to ratings agency Moody's. It said Greece's fiscal strength was "low" and the potential to reduce its debt burden was uncertain:

The Greek parliamentary vote averts an immediate disorderly default and potential exit from the euro area, but risks remains elevated given Greece's weak institutions and substantial political scepticism on the bailout conditions.

The vote - following votes in other parliaments on Friday - should pave the way for the Greek government to receive much-needed liquidity to make its upcoming large external payment obligations for at least the next month.

12.07pm BST

Greece's interior minister Nikos Voutsis has said elections could come in September or October.

Speaking on Kokkino radio station, he said that elections are highly likely. The station reports:

"If it's not September it will be on October and it will be a product of an overall insight-not just of the Syriza government- on the broader developments" he said.

Asked what would be the main question for the next election, the minister of Interior said it would be a mandate to apply our program.

#SYRIZA Nikos Voutsis: Elections September or October #Grelections #ThisIsACoup http://t.co/49RktxWCvm pic.twitter.com/EQj6bIzzm8

11.44am BST

The European Commission says it takes the Greek vote as a positive signal, and believes a compromise on a bridging loan for Greece is within reach.

It added that short term funds could be disbursed rapidly, reports Reuters.

11.43am BST

The Eurogroup call has finished and more news is expected later today, according to its spokesman:

Call #Eurogroup has finished. More on the outcome early afternoon #Greece

11.40am BST

Despite concerns from EU ministers about Greece's ability to implement the proposed reforms - Finland's Alexander Stubb for one - the EU reportedly believes that the vote last night satisfies the bailout terms:

#BREAKING Greek parliament vote satisfies bailout deal terms: EU official

European Commission-Institutions Assess Greece Has Legally Implemented 4 Key Measures Agreed At Summit. (DJ)

11.28am BST

Austrian finance minister Hans Jirg Schelling has said he has heard from sources at the European Central Bank that the emergency liquidity assistance for Greece will be extended, Reuters is reporting.

Schelling also said he expects an agreement on a bridging loan for Greece to be reached by late afternoon tomorrow.

11.20am BST

And here's the ECB (central bank) and ECB (cricket) confusion, as tweeted by the ECB's head of media:

A typical morning on the @ecb mentions thread. (Not sure anyone every tweets monetary policy to @ECB_cricket) pic.twitter.com/cWXoEuXzLJ

11.17am BST

That leaves the German and Austrian parliaments to vote tomorrow.

Meanwhile the European Stability Mechanism council will have a conference call tomorrow to decide whether to begin negotiations about a third Greek bailout:

ESM governing council will have teleconf tomorrow at 4pm BXL time to make formal decision to start negotiations. #Greece

11.16am BST

Finland has given its approval to start negotiations for a new bailout programme for Greece and for talks on bridging finance.

The Grand Committee, which acts on behalf of the country's MPs, voted in favour of the request for talks (a day earlier than we had expected.)

#Finland parliament approuves #greekment . FinMin refusing possibility of haircut but open to discuss other options. https://t.co/M0eHFfmttZ

Stubb: Today we have mandate from FI parliament for bridge financing and begin of negotiations of 3rd bailout. #Greece

Stubb: Finland won't accept haircut. Some other form of debt restructuring might be discussed. #Greece

Stubb: Though hard to see much space for further debt relief since already maturities very long and interest rates low. #Greece

Stubb: I'm a bit worried after Greek PM last night said he doesn't believe in this programme. #Greece

Stubb: Clear that in order to conclude ESM prog talks Greek gov't must fully commit to its implementation. We have to be able to trust them.

11.06am BST

New Forsa/Stern poll of German voters: - 55%: Merkel right to try keep #Greece in; - 31%: #Grexit should've been forced; - 14%: undecided.

10.59am BST

Secondly, film of violence that broke out at last night's protests:

10.58am BST

Meanwhile here are a couple of videos from last night.

First the Greek parliament passing the bailout deal:

10.53am BST

The a7bn bridging loan for Greece has been agreed in principle and could be announced tomorrow, Bloomberg is reporting:

Euro Area said to agree in principle to a7bn #Greece bridge loan. Eurozone bridge loan to Greece would be announced tomorrow, BBG reports.

10.45am BST

After Germany's Wolfgang Schiuble raised the prospect once more of Greece leaving the eurozone temporarily, Greek deputy prime minister Yannis Dragasakis has dismissed the idea.

In a Facebook post he said Schiuble was offering the carrot of a temporary exit to relieve the debt burden, with the stick of the threat of bankruptcy. But he said there were ways within the existing framework to allieviate the debt burden (debt relief along the lines suggested by the IMF perhaps, with a 30 year grace period).

#Greece DepPM @YDragasakis reacts to #Germany FinMin Schiuble @DLF interview: 'No timeout. Reprofiling in the #euro' https://t.co/ivINWUduxL

Within the current framework there are technical capabilities that could alleviate the Greek economy and society from the excessive burden of debt, putting it on a sustainable path. These, with persistence and rigor, we try to make the most of defending the long term interests of Greece and of Europe.

10.28am BST

The Greek reshuffle may not happen today after all, it seems:

#Greece cabinet reshuffling may be delayed until Friday (via @capitalgr) #politics

10.12am BST

More from the radio interview earlier with German finance minister Wolfgang Schiuble.

Reuters reports:

[Schiuble] questioned whether Greece will ever get a third bailout programme on Thursday, a day after the Greek parliament passed a package of stringent measures required to open negotiations on financial aid.

He said he would submit a request to Germany's parliament to vote on opening the talks and said passing the reforms was an "important step", but it would be hard to make Greece's debt sustainable without writing some of it off, an idea Berlin considers to be illegal.

10.07am BST

Finland has to vote on the Greek bailout deal, and could prove tricky to get a mandate for a deal as our Europe editor Ian Traynor explained earlier in the week:

*FINLAND TO DEMAND GENUINE GREEK COMMITMENT TO REFORM, PM SAYS

FIN PM Sipili: Biggest concern is Greek government's lack of ownership over programme. It needs to strengthen during actual debt talks.

10.04am BST

Meanwhile the Greek bank holiday has been extended until 17 July, according to Greek news agency ANA-MPA, which is hardly a surprise. The banks cannot reopen without further support from the European Central Bank.

9.57am BST

Here's some bits of speculation about the European Central Bank and its emergency liquidity assistance for Greek banks:

Sources suggest #ECB has not yet decided on #Greece ELA, but #Greece requesting increase of a1.5bn (@RANsquawk)

#ECB said to favour maintaining #Greece ELA unchanged ~BBG

Sources: #Ecb likely to keep #Ela unchanged today and to rise it once Esm negotiation will start and bridge loan will be agreed #Greece

9.51am BST

After meeting ECB president Mario Draghi yesterday, US Treasury Secretary Jack Lew has been in talks today with German finance minister Wolfgang Schiuble.

#Germany FinMin Schiuble and US Tsy Sec Lew meet in Berlin pic.twitter.com/1ebz4Ijl2n /via @BMF_Bund

9.39am BST

The chairman of Germany's CSU Horst Seehofer has welcomed the Greek vote to begin negotiations and said it was a sign of trust building. He called on his party to back the deal in the German parliament tomorrow. He told the Si1/4ddeutsche Zeitung:

This is the beginning of a trust building, which is urgently needed after the last few weeks and months.

I strongly recommend that the friends of my party and our group formally agree to start negotiations.

9.22am BST

In the middle of the financial crisis, Greeks have been buying big ticket electrical items such as large screen TVs, writes Shane Hickey.

That is according to Dixons Carphone, whose Kotsovolos arm in Greece returned to profitability during the year. But the company said:

Dixons Carphone results factlet: large screen TVs sold especially well in Greece. Everyone keeping an eye on Syntagma Square..?

9.15am BST

And here are his concerns, and they revolve around our old friend "implementation":

The real trouble and challenges may come later. No majority, no ownership could dent implementation of measures & reforms #Greece #eurozone

9.03am BST

And here comes the man who blamed the Greek situation on "Syriza Spring" to welcome last night's vote, in a rather downbeat way. Slovak finance minister Peter Kazimir tweets:

I welcome the positive vote of the Greek parliament, but this is the easier part of the deal #Greece #eurozone #ECB #IMF

8.54am BST

More from the ESM's Klaus Regling on German radio, who said the emergency fund would provide around a50bn to the Greek bailout:

Regling tells @ardmoma that ESM will provide about a50bn for #Greece's a85bn 3rd bailout.

Regling to @ardmoma: Eurosummit made clear that it 'is up to a85bn - not at least a85bn' for #Greece in 3rd programme.

8.35am BST

European markets have opened higher after the Greek vote which opens the way for negotiations over a third bailout:

8.24am BST

Is the eurozone about to give Greece a break on debt relief?

Christine Lagarde, the director of the International Monetary Fund, hinted as much when she said Greece's creditors were moving closer to easing the burden of Greece's debt.

8.04am BST

Ahead of the vote on the bailout tomorrow in the German parliament, the country's finance minister Wolfgang Schiuble is still persisting with his suggestion of a temporary exit from the eurozone by Greece. Reuters reports:

Schiuble said he would submit a request to Germany's parliament to reopen negotiations on Greece's third bailout with "full conviction", but still believes a temporary Grexit would perhaps be a better option.

"We are a step further," Schaeuble told Germany's Deutschlandfunk radio on Thursday, after the Greek parliament passed a sweeping package of austerity measures demanded by European partners.

7.58am BST

Yields for Spanish, Portuguese and Italian bonds have dipped after the Greek vote, with investors showing some cautious optimism for the outlook. They fell up to 4 basis points to around six-week lows.

7.52am BST

Well it comes under the category of stating the obvious, but the head of the European Stability Mechanism has warned Greek banks could collapse without a third bailout.

Klaus Regling, head of the agency which gives financial support to eurozone countries, told German broadcaster ARD:

If everything should fail, then the Greek banking system would collapse. If the four biggest systemically relevant banks in a country no longer work, this has grave consequences not just for Greece... but also for the whole eurozone.

7.42am BST

Asian markets edged higher after the news of the Greek vote, and European markets are expected to open in positive territory ahead of the ECB meeting:

Our European opening calls: $FTSE 6788 up 34 $DAX 11651 up 112 $CAC 5091 up 44 $IBEX 11419 up 84 $MIB 23601 up 208

European stocks are expected to rejoice higher at the market open on Thursday after parliamentary approval overnight in Athens makes the Greek bailout deal as good as done. A bridge financing arrangement to allow Greece to meet its July 20 payment to the ECB using European Union funds is also nearly in place after agreeing protection for non-Eurozone countries such as Britain.

The 10,000 protestors outside parliament in Athens and the resignation of the deputy finance minister suggest the next risk for Greece's stability is political. PM Tsipras will try a cabinet reshuffle but if that fails to sure up confidence in Syriza, a worst case scenario would be snap elections.

7.41am BST

Good morning and welcome to our rolling coverage of the Greek financial crisis.

So, if this week's deal between Greece and its creditors was a Pyrrhic victory for Alexis Tsipras - given the bailout terms were worse than the previous offer - what then of last night's vote?

Confirmation just went out: #Eurogroup teleconference tomorrow 10 AM #Greece

Source	RSS or Atom Feed
Feed Location	http://feeds.theguardian.com/theguardian/business/economics/rss
Feed Title
Feed Link	http://feeds.theguardian.com/