Financial Times
July 13, 2011
The International Monetary Fund has urged the European Central Bank to approve a fresh €30bn liquidity package to keep Greece’s cash-strapped banks afloat in case of a possible default.
The package was agreed in February by the IMF, ECB and European Commission, but it has not yet been made available to Athens banks.
The delay has added to the squeeze on Greek banks, which have been shut out of wholesale lending markets for the past 18 months and face an erosion of deposits.
It also highlights a dispute between the IMF and Greece’s European partners over support for the country’s banking sector amid its escalating debt crisis.
Poul Thomsen, head of the IMF mission to Greece, said on Wednesday: “It is essential that the ECB stands ready to provide liquidity support if needed … Bonds guaranteed by the [Greek] government can be used for this purpose.”
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