MercoPress. South Atlantic News Agency

Greek banks to remain closed until next Monday as ECB caps funding

If “there is no more political accord in sight for a program, then our rules force us to stop completely,” said ECB member Christian Noyer

The European Central Bank capped the amount of emergency funding it is providing to the Greek banking sector at €88.6 billion on Wednesday, in a sign that the central bank is awaiting the outcome of this weekend’s crunch talks on Greece before deciding whether to extend a further financial lifeline to the indebted country.

 The decision by the bank not to raise the ceiling of emergency liquidity assistance (ELA) it is providing to Greek banks, effectively prohibits the Greek banks from reopening. The ECB is expected to review its provision of ELA again next Monday.

Earlier, ECB governing council member Christian Noyer said that Sunday represented Greece’s “last chance” to avoid a catastrophe. If “there is no more political accord in sight for a program, then our rules force us to stop completely,” he told French radio. “We’re starting to be very worried. We can see the disaster coming if no decision is taken.”

As Greece submitted an official request to the European Stability Mechanism (ESM) for a three-year bailout on Wednesday, senior officials representing euro zone finance ministers held intensive talks throughout the day, though an expected conference call of the bloc’s finance ministers did not take place.

Further negotiations at official level are expected on Thursday, with euro zone finance ministers expected in Brussels to sign off on any deal on Saturday.

Greece has been given a deadline of midnight tonight to present “comprehensive” details on its reform proposals to creditors, which are expected to outline the government’s proposals on pension and tax reforms. Officials from the European Commission and other creditor institutions will then assess the proposals, a European Commission spokeswoman said on Wednesday, before they are sent to the Euro-group of finance ministers for consideration.