ECB puts no fresh cash into Greek banks

BERLIN (AFP) - The ECB said on Sunday it would keep open its emergency cash lifeline to debt-hit Greece but would not increase help to banks, leaving the country facing a financial crunch as a bank run gathered pace.

The European Central Bank's Governing Council held a telephone conference the day after talks between Athens and its creditors broke down, leaving Greece headed for an EU-IMF default and possible exit from the euro zone.

As anxious citizens lined up to get cash from bank machines, the Greek government appeared under pressure to impose capital controls limiting the size of withdrawals or overseas transfers.

The ECB Governing Board said it "decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday".

"The Governing Council stands ready to reconsider its decision," it added in a statement.

The Frankfurt-based bank has been the lifeline keeping Greek banks - and by extension the Greek state - afloat with the ELA emergency cash through five months of tortuous negotiations that have now taken a sharp turn for the worse.

As fears grew of financial market turmoil and contagion on Monday, it also said "the Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance".

The ECB - which has maintained ultra-low interest rates and launched large-scale quantitative easing measures - said it "is determined to use all the instruments available within its mandate" to maintain price stability.

Bank of Greece chief Yannis Stournaras said in the same statement that his bank "will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances".