ECB’s Nowotny: ELA Can’t Be Long-Term Financing Substitute for Greek Banks

Wall Street Journal
April 17, 2015

European Central Bank governing council member Ewald Nowotny said Friday the central bank’s emergency-lending program can’t become a long-term financing mechanism for Greek banks.

“Due to the legal structure, the ECB isn’t in the situation to substitute long-term financing, that’s a political decision,” Mr. Nowotny said at the International Monetary Fund’s Spring Meetings.

“If a decision [on a program for Greece] doesn’t come about, the ECB can’t replace it, we’re not a replacement for a politically-decided program,” Mr. Nowotny said. The ECB can only offer emergency-liquidity assistance, or ELA, to solvent banks, and the Greek banks currently receiving it can’t increase their exposure to Greek government debt.

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