Greek banks maintain cash buffer

ATHENS • Greece did not request a further increase in emergency liquidity assistance (ELA) from the European Central Bank yesterday in a sign that Greek banks are not burning through cash as fast as previously feared, sources said.

The reports came as Prime Minister Alexis Tsipras, struggling to contain a revolt in his left-wing Syriza party, said that his government would not implement reform measures beyond those agreed with lenders at a euro zone summit.

"I know well the framework of the deal we signed at the euro zone summit on July 12," he told Sto Kokkino radio. "We will implement these commitments. Nothing beyond that."

Mr Tsipras is under pressure from Greece's creditors to go beyond the two reform packages passed by Parliament and include unpopular steps to curb early retirement and tax breaks for farmers.

With Greece close to the financial abyss last month, Mr Tsipras was forced to make concessions on reform and austerity in order to open talks on a third bailout worth up to €86 billion (S$130 billion).

These funds are expected to shore up confidence in its ailing banking sector, which is currently restricting withdrawals to €420 a week to prevent an exodus of cash. But capital controls may need to remain until a bailout package is finalised, scheduled for late August.

However, the Bank of Greece defied some expectations and did not request another increase in ELA, which had been increased by €900 million in each of the past two weeks. The cap remained at €91 billion, indicating that the banks are maintaining a cash buffer.

"Greek banks have an ample cushion of liquidity for the moment," a senior banker at a private Greek bank said. "The real test will come when the government decides to relax restrictions on capital controls."

Mr Tsipras, who faces a tough party central committee today, has warned that he could call early elections if he no longer has a parliamentary majority on the reforms.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 30, 2015, with the headline 'Greek banks maintain cash buffer'. Print Edition | Subscribe