The upcoming board meeting of the European Central Bank on Wednesday is regarding as being critical, as it will discuss the possibility of discount on the collateral offered by Greek banks. Rumors suggest the ECB will increase the emergency liquidity assistance towards Greece.
Foreign media speculates that the ECB may implement a 10% “haircut” of the collateral, under pressure from the central bankers, which has escalated after Greece decided to group its IMF loan payments.
The value of the Greek bank collateral is estimated to be about 143 billion euros. So far Greek bank have received 80.7 billion euros from the Emergency Liquidity Assistance (ELA) mechanism, meaning that they may draw a further 20 billion euros, for a maximum of 100 billion euros, provided the discount remains at 30%
Should the discount increase to 40%, as rumored, then the maximum amount that Greek banks may draw from the ELA will drop to 85.8 billion euros, meaning that only 5.1 billion euros will be available. Based on the outflow of capital from Greek banks, this will last for about a month.
