A European Central Bank board meeting has been arranged for Wednesday, where the Emergency Liquidity Assistance (ELA) and possibility of a haircut on the collateral of Greek banks will be discussed.
Last week, the ECB decided to extend the ELA towards Greece by 2.3 billion euros and a similar decision is also expected today. Greek banks are believed to have about 1 billion euros available.
Banking cycles have suggested that the ECB board members may decide upon a “symbolic” haircut of the collateral offered by Greek banks – perhaps 10% – in order to increase the pressure on the Greek government. Such a “haircut” would result in a loss of about 8 billion euros in collateral for Greek banks, which in total is estimated to be 35-40 billion euros.
Meanwhile, other banking sources have commented that the European Central Bank will increase the emergency liquidity in order to cover the amount of deposits that were withdrawn by Greek banks last week.
