COMMENT: ECB - Referendum related uncertainty for ELA - IFR
03-Jul-2015 10:32:43
LONDON, July 3 (IFR) - ECB's Constancio has highlighted that the central bank
has prepared all tools to address Greek situation. Unlike 2012 the ECB has QE to
fall back on should the Greek crisis go from being contained to contagious.
However, the difficulty for the ECB comes from what to do with the ELA after the
Greek referendum. A 'yes' vote would make it easier for the ECB to continue with
ELA support even if there is the risk of a fresh election. A 'no' vote would
make things difficult and raises the prospect of higher haircuts on Greek
collateral. Although given the stressed state of the Greek banking system the
ECB might decide to maintain existing stance preferring not to be seen as
aggravating the situation for Greek banks. With Greek cash reserves reportedly
down to EUR500mn the ECB will be aware that its actions could make an already
difficult situation on the ground in Greece considerably worse.
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