FRANKFURT (Reuters) - The European Central Bank reinstated Greek banks' access to its cheap funding operations on Wednesday (June 22), allowing lenders to come off an expensive emergency lifeline after more than a year.

Greek banks lost their access to the ECB's regular funding mechanism early last year when Athens came close to being ejected from the euro zone, and lenders have been relying on Emergency Liquidity Assistance ever since.

While Greek debt is still rated "junk" by credit agencies, the ECB waived its minimum credit rating requirement, letting banks post government-guaranteed debt as collateral in exchange for normal funding, a big step in normalising their operations and reducing costs.

The interest rate on Emergency Liquidity Assistance is around 1.5 per cent, well above the ECB's main refinancing rate, currently set at 0 per cent.