By A. Doga
The prospect of the European Central Bank (ECB) restoring systemic Greek lenders’ access to credit lines would be a major fillip for the country’s battered banking sector.
A decision could come at an ECB policy meeting on June 2, Bloomberg said in a dispatch on Wednesday, and quoting sources it said were “familiar with the matter”.
According to Bloomberg, “…a new waiver on Greece’s junk-rated debt will probably be proposed by the ECB board once a staff-level agreement between the government and auditors representing creditor institutions is reached, the people said, asking not to be named as the matter is confidential.”
In Athens the restoration of the waiver is seen as a move towards completion of the currently delayed first review of the Greek program (third bailout). Such a development would also boost liquidity and the cost of borrowing by domestic lenders, all moves towards increasing confidence in the banking sector.
Market analysts in Greece also believe that an ECB decision would open the way for an end to capital controls still imposed on Greek bank deposits, as depositors can only withdraw 420 euros per week. Electronic transactions have nevertheless skyrocketed in the wake of capital controls imposed in late June 2015.
Bloomberg also reported that with the restoration of the waiver, ECB head Mario Draghi is also considering the prospect of allowing the eligibility of Greek government bonds for inclusion in the ECB’s quantitative easing scheme, assuming that the bailout review is achieved.
