ECB lends Greece a hand

The ECB President said nothing at all about the situation in that country. He explained that the Council had raised the ELA ceiling by €0.9bn. 

The new limit would apply for one week, after which the ECB would reassess the situation. Draghi justified the slight increase in the ceiling by referring to the altered situation. He explicitly mentioned the vote in the Greek parliament, the approval of a bridge financing package and the votes in parliaments of other euro zone countries.

The ECB left the haircuts on collateral accepted for ELA unchanged, as the Council has only recently increased them. This Decision can be seen as a political gesture, whereby the ECB extends a helping hand to Greece, but in fact does little to reduce pressure on the country.

Asked whether the ECB was concerned that Greece would, as in the past, fail to implement adequate reforms, Draghi said there were certainly doubts about Greece's will and capacity to implement measures. It was now up to the Greek government to dispel those doubts.

However, the ECB could not take decisions based on such doubts, but instead had to proceed on the assumption of Greece remaining in the euro zone. The measures recently decided by the Eurogroup were aimed at allowing Greece to become a "thriving economy".

"Consequently, 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", says Commezbank.

Draghi did not say what would happen if Greece fails to service the SMP bonds maturing on Monday. He merely said he was confident that repayment would be forthcoming.