Wall Street Journal
Editorial
February 17, 2015
Greece’s leaders may try again Wednesday to negotiate an extension of their eurozone bailout, after a summit collapsed on Monday without a deal. As creditors try to reach an agreement with Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis, average Greeks are revealing doubts about their own government.
That’s the best explanation for capital outflows that are fast becoming a crisis in their own right. By some estimates as much as €2 billion ($2.28 billion) is leaving Greece each week, and more than €14 billion has left since the start of the year. Fitch estimated last week that Greek bank deposits are now at least 8% below their level at the end of November.
Making matters worse, the European Central Bank (ECB) announced two weeks ago it will no longer accept Greek bonds as collateral, cutting banks off from ECB funding at the 0.05% repo rate. Instead, they must borrow from the Greek central bank—under ECB supervision—at 1.55% using the Emergency Liquidity Assistance program. The ECB is due to decide Wednesday whether to continue that program.
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