Greek banks 'being propped up by $128bn ELA fund'

22 May 2012

Greece's banking industry is being supported by a secret multi-billion euro emergency liquidity fund from the European Central Bank (ECB).

That is according to a report in the Financial Times today (22 May), which has revealed the central institution is currently providing a sum of around €100 billion ($128 billion) to protect the struggling country's financial system.

Although no specific details of the plan have been announced by the ECB, it is thought this use of its emergency liquidity assistance (ELA) budget would be withdrawn should Greece leave the eurozone.

Throughout the region's debt crisis, the ELA has not been facilitated regularly by the ECB but was used to assist Ireland at the height of its problems and is now seen as crucial in the rescue efforts for Greece.

Discussing why this huge sum of liquidity had been kept quiet, governor of the Belgian central bank Luc Coene commented: "You don't say when you are in an emergency situation, because then you make the situation worse. So I really don't see the usefulness of being more transparent."

By Claire Archer

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