In light of this intervention, and that of Mr Schäuble, ECB president Mario Draghi said his institution’s support for Greek banks was not an issue for ministers to decide.
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They shut the door on extending a credit lifeline, leaving Greece facing a default that could push it out of the euro and cause ripple effects across the European economy and beyond.
It is understood that Mr Noonan raised the increasing reliance of the Greece banks on emergency liquidity assistance from the ECB with fellow ministers.
European and Greek stocks rose on news of a possible deal, though it’s clear that Leftist Prime Minister Alexis Tsipras will have to compromise on some of the anti-austerity promises he was elected on.
As president of the Bundesbank, Weidmann also sits on the ECB’s Governing Council, which holds daily phone calls to discuss the extension of the ELA funding.
The European Central Bank Governing Council started revising ELA on a daily basis on Monday as negotiations between Greece and its creditors over the country’s bailout package accelerated.
The rally, informally named “Menoume Evropi”, meaning “We Live in Europe”, featured thousands of EU supporters waving Greek flags alongside EU flags and calling for the nation to remain part of the European Union coalition.
Greek banks regularly roll over between 8 billion euros ($9 billion) and 9 billion euros of T-bills, short-term debt which is fundamental to the Greek government’s financing.
“Banks receiving ELA should be urged to do their utmost to improve their liquidity situation and be prevented from worsening it further by rolling over illiquid T-bills of their sovereign”, Weidmann said.
In early trading today, the iShares FTSE Greek 20 ETF (GREK) is down 3%, while Piraeus Bank (BPIRY) is down 10%, Eurobank Ergasias (EGFEY) is down almost 11%, Alpha Bank (ALBKY) is down 7.4% and National Bank of Greece (NBG) is down 5%.
With nervous Greek savers and companies withdrawing billions of euros in cash from their accounts, the country’s banks depend nearly entirely on central bank funding to avoid collapsing and potentially dragging the country down with them.
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One of the people who spoke to Reuters said the decision had been prompted by “the positive signal from the leaders’ summit meeting” and hopes that a deal was at hand.
