Banks get a lifeline as Greece asks for new deal

Chris Papadopoullos
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Yanis Varoufakis insists Greece will not accept an extension of the programme (Source: Getty)
The European Central Bank (ECB) extended its emergency support (ELA) to Greek banks last night, while Greek officials are set to submit an offer for a loan agreement to European finance ministers today.

The ECB extended the ELA by two weeks and lifted the cap by €3.3bn (£2.4bn) to €68.3bn. However, sources told Reuters that this raising of the cap was opposed by German central bank chief Jens Weidmann. They also said that the Greek central bank had requested an extension of €5bn.

Greek banks are struggling to cope with outflows of bank deposits.

A source also told Reuters that the deal Greece will look to strike tomorrow would be based on a draft agreement drawn up earlier this week by European Commissioner Pierre Moscovici. Greek finance minister Yanis Varoufakis described that draft as “splendid”, before it was withdrawn. He wants a loan while the current bailout programme is drawn up again from scratch and insists Greece will not accept an extension of the programme.

Other finance ministers such as Jeroen Dijsselbloem and Wolfgang Schauble have insisted Greece must apply for a programme extension.

US Treasury secretary Jack Lew called Varoufakis yesterday to urge both sides to reach an agreement.

“Secretary Lew noted that failure to reach an agreement would lead to immediate hardship in Greece, that the uncertainty is not good for Europe, and that time is of the essence,” the Treasury said.

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