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BBC News – Greek banks, the euro and the ECB

Talk of a run on Greek deposits, and some banks being cut off from European Central Bank (ECB) support, have added a fresh twist to scary talk about Greece and the euro…

… Depending on who you talk to, anything from €700m ($892m; £560m) to €1.2bn was taken out of banks in the days after the election…

…At the same time, the ECB has apparently now said that it won’t directly lend to some Greek banks that it judges to be technically “insolvent”…

… the banks that have lost access to direct ECB funding can almost certainly still get money from the Greek central bank, which, of course, is ultimately, getting its cash from the ECB (though unlike the more direct form of ECB liquidity support, all the risk implicit in this so-called ELA lending is, formally at least, borne by the Greeks alone).

…both stories are complicated… but, taken together, they do help to underscore two important realities.

The first is that the sheer uncertainty hanging over Greece and the lack of a proper government is greatly increasing the room for costly financial accidents…

…The second and most important is that the ECB is once again exactly where it doesn’t want to be: right at the centre of events.

via BBC News – Greek banks, the euro and the ECB.

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