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Greek banks to remain shut, ECB to maintain liquidity assistance

Greek banks to remain shut, ECB to maintain liquidity assistance

(8 July 2015 – Greece) The European Central Bank (ECB) said it will maintain emergency liquidity assistance to Greek banks at the 26 June 2015 level instead of the possibility of further help.

Following a proposal from the Bank of Greece, the ECB Governing Council said the financial situation of the Hellenic Republic has an impact on Greek banks, since the collateral they use in ELA relies to a significant extent on government-linked assets.

“In this context, the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA,” the ECB said in a statement.

“The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area.

“The Governing Council is determined to use all the instruments available within its mandate,” the ECB said.

Meanwhile it has been reported that the banks will stay shut until at least 9 July and will likely run out of money by the end of the week.

With the banks closed, many ATMS empty and the rest limited to dispensing just €60 (A$88.50) the country is starting to be hit hard.

The government is also running out of money to pay public service wages and pensions, and supply hospitals and other public bodies.

To reduce financial hardship for citizens it decided to go easy on revenue-raising: in Athens the public transport is free until further notice, and tax collection has "almost dried up" according to one report.

Greek Prime Minister Alexis Tsipras met with his political allies and opponents for almost five hours on 6 July, emerging with a joint statement signed by almost the entire political spectrum backing his efforts to seek a new deal from the country's creditors.

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