ECB lowers emergency funding cap for Greek banks to 25.8 billion euros

The European Central Bank lowered the cap on emergency liquidity assistance (ELA) Greek banks draw from the domestic central bank by 1.1 billion euros to 25.8 billion euros (23 billion pounds), the Bank of Greece said on Thursday.

The move reflected improved liquidity conditions, taking into account private sector deposit flows and banks’ access to financial markets, it said. The ELA ceiling is valid up to December 14 inclusive.

Greek banks have relied on emergency liquidity assistance (ELA) since February 2015 after being cut off from the ECB’s funding window. Emergency funding is more costly than borrowing directly from the ECB.

In June last year the ECB reinstated Greek banks’ access to its cheap funding operations, allowing lenders to reduce their dependence on the emergency liquidity lifeline.

ELA funding to Greek lenders dropped by 5.74 billion euros, or 20 percent, to 22.75 billion euros in October compared to the previous month. [Reuters]