Tightening the ELA would have forced Greece to lower its 60 euros-a-day ($66) limit on cash withdrawals.
Greek banks were left to rely on emergency funding after Europe’s central bank earlier this year revoked a waiver that had allowed the institutions to pledge junk-rated Greek government bonds as collateral in exchange for short-term loans via the ECB’s regular-funding operations.
Greek Prime Minister Alexis Tsipras has called a referendum for tomorrow to asks Greeks whether they are willing to swallow tougher austerity measures in return for bail-out funds from its creditors, the worldwide Monetary Fund, the European Commission and the ECB. If Greeks vote for the proposals of worldwide creditors, then the probability of agreement will increase.
Under the ECB’s rules, ELA can only be provided to banks that are seen as solvent.
Banks are likely to run out of money hours after the referendum ends.
Even if Greeks vote yes Sunday, the ECB faces a number of hurdles before it can turn the lending spigots back on, most notably the more than €3 billion that Greece must pay the ECB on July 20 to redeem bonds held by the central bank.
“The referendum is relevant for our analysis and decisions exclusively, because it affects the possibilities for an agreement between Greece and other member states regarding financial assistance and adjustment in the Greek economy”, Constancio said at an event in Vilnius.