ATHENS--The European Central Bank on Wednesday increased the
amount of money Greek banks can borrow under an emergency lending
program, extending a lifeline for the country's banks as its
government continues tense negotiations with its creditors over its
bailout program.
The ECB raised the amount the Greek central bank can lend its
banks to EUR71.8 billion ($77.3 billion) from EUR71.1 billion the
previous week, according to a Greek bank official. Under the
emergency-liquidity assistance program, or ELA, the Greek central
bank lends money to its country's financial institutions. The loans
carry a higher interest rate than standard ECB loans, and the
credit risk stays with Greece.
The ECB declined to comment.
Greek banks were forced into ELA last month after the ECB
suspended an exemption that had allowed banks to use junk-rated
Greek government bonds as collateral for regular ECB loans.
Last week, the ECB instructed Greece's largest commercial banks
that they can't raise their holdings of Greek government debt. The
ban on Greek banks increasing their exposure to the Treasury bills
poses a challenge to Greece's government, which faces several major
debt repayments in early April.
ECB President Mario Draghi has rejected criticisms that the ECB
is playing hardball with Greece, and ECB officials have insisted
that they are simply applying their rules.
At around EUR100 billion, ECB lending to Greece accounts for
about two-thirds of the country's gross domestic product, Mr.
Draghi said on March 5.
Write to Nektaria Stamouli at nektaria.stamouli@wsj.com and Todd
Buell at todd.buell@wsj.com
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