ECB leaves emergency funding to Greece unchanged at 89bn euros

“It’s clear that talks are likely to include some extent of debt recast or write-downs to provide relief to Greek public finances”.

0904 – European Parliament head Martin Schulz says he is in favour of Greece staying in the euro zone, having said on Sunday it might have to introduce another currency if its voters rejected bailout terms. With Greece’s future hanging in the balance, the country is running out of cash and is at risk of a financial crash.

Euclid Tsakalotos was named as his replacement. Greek lenders have been reliant on the system since February, shortly after the government of Prime Minister Alexis Tsipras came to power.

The streets filled with euphoric Greeks when the results of the country’s anti-austerity referendum were announced.

“This is a further warning shot to the Greek government that an agreement with its creditors is needed, and soon”, said BNP Paribas economist Ken Wattret. “In the absence of a deal – or at least concrete progress towards a deal – it is unlikely the European Central Bank will increase its own exposure to Greece“. That is of little use to Greek banks though, as Greek debt is not rated highly enough to qualify.

Leaders from the countries which make up the currency bloc are also meeting on Tuesday for an emergency summit.

Pensioners are given priority tickets as they wait to receive part of their pensions at a National Bank branch in Athens.

The continued freeze, but not reduction, for ELA underscores the ECB’s reluctance to force the issue on Greece as long as there is any prospect for a deal between Athens and other eurozone governments for a new aid package.

As for his European negotiating colleagues, he said of them: “I shall wear the creditors’ loathing with pride”.

But everything hinges on European reaction.

European Union President Donald Tusk said on Twitter: “I have called a #EuroSummit Tuesday evening at 18h to discuss situation after referendum in #Greece”. But with Greece’s bailout programme now officially expired and no new programme on the table, the conditions for ELA to be kept open are no longer fulfilled.

The austerity terms demanded by the troika contributed to a deep depression, which has left Greece with the highest jobless rate in the eurozone.

However the European Central Bank also said that it would demand a larger discount – or haircut – on the collateral which the Greek banks must supply it with, in return for emergency funding.

Germany, however, remains reluctant to discuss debt forgiveness.

He said in a statement released by the Finance Ministry that it is crucial there is a “proper resolution” involving debt restructuring immediately.

On a Monday BBC interview from Athens, Greece’s economy minister, Giorgos Stathakis, made a plea to the European Central Bank for more ELA to keep the banks alive for another ten days or so to allow new bailout talks to take place between the Greek government and its creditors. Reports indicate that German Chancellor Merkel will travel to Paris on Monday for talks with French President Hollande “to jointly assess the situation after the Greek referendum and to address the continuation of Franco-German close cooperation in this matter”.

Tspiras is scheduled to meet Eurozone leaders on 7 July.

Both stressed the urgency of coming to a decision on a solution to Greece’s financial woes, with Merkel demanding proposals from Greece’s prime minister this week.

On the same day Greece defaulted on an International Monetary Fund repayment, becoming the first developed nation to do so.