15 Jul 2015
ECB Preview: It’s all about Greece - Danske
FXStreet (Mumbai) - Analysts at Danske Bank believe that the focus at Thursday’s ECB meeting will be on Greece and the ECB’s liquidity provisions to the fragile Greek banking sector.
Key Quotes:
“When the ECB members meet on Thursday 16 July the Greek parliament is expected to have passed the prior actions to the agreed economic reform measures late Wednesday evening as a further step towards obtaining a third ESM programme.”
“We expect the ECB to start gradually raising the cap on the ELA funding to Greek banks – a decision which could be announced during the press conference.”
“Although the risk of Grexit is reduced substantially with the latest ‘conditional deal’, the ECB is likely to be asked how it could continue to provide ELA funding to the Greek banks after the Greek population voted ‘No’ in the referendum, as this reduced the ‘credible prospect of agreement’.
“We expect, however, that the ESM programme has to be in place for this to happen, and the Greek banks are dependent on the ELA until ESM negotiations are complete.”
“We expect that ECB President Mario Draghi, on the other hand, will reiterate his answer from the latest press conference that ‘We are a rule-based institution. Our ELA is devised and designed to supply credit to the private sector, not to finance the government. These rules are being applied and they are being regularly reassessed as developments in the financial markets unfold.’”
Key Quotes:
“When the ECB members meet on Thursday 16 July the Greek parliament is expected to have passed the prior actions to the agreed economic reform measures late Wednesday evening as a further step towards obtaining a third ESM programme.”
“We expect the ECB to start gradually raising the cap on the ELA funding to Greek banks – a decision which could be announced during the press conference.”
“Although the risk of Grexit is reduced substantially with the latest ‘conditional deal’, the ECB is likely to be asked how it could continue to provide ELA funding to the Greek banks after the Greek population voted ‘No’ in the referendum, as this reduced the ‘credible prospect of agreement’.
“We expect, however, that the ESM programme has to be in place for this to happen, and the Greek banks are dependent on the ELA until ESM negotiations are complete.”
“We expect that ECB President Mario Draghi, on the other hand, will reiterate his answer from the latest press conference that ‘We are a rule-based institution. Our ELA is devised and designed to supply credit to the private sector, not to finance the government. These rules are being applied and they are being regularly reassessed as developments in the financial markets unfold.’”