Trade with Greece
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This was the case up until November.
Because then, the rushed presidential election
and the expectation —which finally became a
reality— of an early parliamentary election
caused uncertainty in Athens to skyrocket.
So, the situation was once again reversed, and
remained unchanged even after the election,
owing to the starkly divergent views between the
new Greek government and the troika.
The following three facts are characteristic and
indicative of the picture described above:
● In just three months —December 2014, and
January and February 2015— more than €20
billion were withdrawn from the banks. Thus...
● ...total deposits in Greek banks fell from a high
of €237 billion (April 2009) to approximately
€140 billion this February. As a result...
● ...the Greek banks’ dependence from the
Eurosystem, i.e. the European Central Bank
and the Emergency Liquidity Assistance (ELA)
facility, increased in January to €87.4 billion
from €56 billion at the end of 2012 (increased
by 56%). This happened because domestic
credit institutions were forced to borrow almost
€5.2 billion from the ELA in January, while they
also drew liquidity of €82.2 from the European
Central Bank.
Under these circumstances, the Bank of Greece
started making repeated requests for raising the
ELA’s funding limits, with Europe’s central banker,
Mario Draghi, sparingly increasing this amount
and making —as expected— any decisions con-
ditional on developments in the negotiations
between the Greek government and its lenders.
In essence, the lenders leave Athens no room for
initiative or manoeuvre in regard to siphoning liq-
uidity from the Greek banking system with the aim
of covering any obligations of the state. This is
clearly evident in the weekly decisions of the
ECB, which increases the Emergency Liquidity
Assistance but only to the point of making sure
that credit institutions remain solvent. This is bet-
ter illustrated when taking into account that the
government seeks funding from the deposits held
by state agencies with Greek banks (ergo the
increase of the relevant limit to €1.3 billion at the
meeting of March 25th, since central bankers can
hardly conceal their irritation and concern for all
this).
According to banking sources, the European
Central Bank is hardening its stance in regard to
the Greek government’s intentions to draw fund-
ing from the Greek banks, and this serves a dual
goal:
To reinforce the Greek banking system against a
possible accident, by providing the absolutely
necessary breather it needs, and to shut the door
to the Greek state —since the ECB has not raised
the ceiling in regard to lending against Greek
treasury bills— in a bid to compel the government
to a swift completion of its negotiation with the
lenders.
“We have been given explicit directions by the
ECB to refrain from financing any state obliga-
