ECB keeps emergency credit open to Greek banks

The European Central Bank said Sunday it is keeping its emergency credit lines open to Greek banks even as Greek depositors are standing in long lines at automated teller machines to withdraw their savings.

The decision keeps open a financial lifeline to Athens, but does not provide more money.

The central bank said it could reconsider its funding, but there was no hint of a resolution in the standoff between Greece and its international creditors. Greece is balking at new austerity demands the lenders are seeking in exchange for release of an $8 billion segment of its long-running bailout that expires Tuesday.

Greek Finance Minister Yanis Varoufakis suggested that Athens might not pay $1.8 billion its owes the International Monetary Fund on Tuesday. He said the central bank, another of Greece’s lenders, profited on Greek bonds in 2014 and ought to simply transfer the money to the IMF to cover the loan payment.

ECB President Mario Draghi said the central bank is working closely with the Bank of Greece to maintain financial stability. But Greek depositors, worried that government officials are about to impose withdrawal limits, lined up at ATMs to get cash. Some machines ran out of cash, but others were being replenished.

“We are all worried because I have stopped at 10 ATMs and I can’t withdraw 100 euros,” said one depositor. “This is what I see. Now we found here one, maybe, I do not know if it will give us something, so we can take some money to see what will happen in the next few days.”

The Greek government scheduled an emergency meeting for later Sunday on whether to impose the limits.

Parliament approves bailout referendum

Meanwhile, the Greek parliament voted Sunday in favor of a request by Prime Minister Alexis Tsipras’ government for a July 5 referendum on the terms of the international bailout deal that the lenders want Greece to accept.

Tsipras said “the people must decide free of any blackmail,” but the government is urging a “no” vote unless the terms are changed. The lenders’ proposal calls for further Greek pension cuts as a condition of releasing the bailout money.

French Prime Minister Manuel Valls warned there is a “real risk” of Greece leaving the 19-nation eurozone if Greek voters say “no” to the bailout proposals in the referendum.

Valls, however, refused to denounce the Greek government’s decision to hold the referendum.  “When you ask the people to decide, to exercise their democratic right, this should not be criticized,” he said.

Valls said he continues to believe “that a deal is possible” and he invited the Greek government “to return to the negotiating table.”

Greece hurtled closer to a eurozone exit Saturday when Europe refused to extend the bailout program.

Greek authorities Friday unilaterally ended negotiations to extend the financial assistance and instead called for the referendum.

Eurozone chief Jeroen Dijsselbloem said ending talks “is a sad decision for Greece.”


(Photo: ECB via