ECB Freezes Greek ELA, Varoufakis Tells BBC "Looking At Imposing Capital Controls, Closing Banks"

Submitted by Tyler Durden on 06/28/2015 08:29 -0400

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With Greece having gone past the point of no return, things are now escalating very rapidly, and moments ago the BBC's Sutton tweeted that the BBC's Mark Mardell was told the Greek government will be "looking overnight at imposing capital controls and closing banks on Monday."

The context, of course, is bluffing until the very end, with Varoufakis claiming that if the ECB were to stop support for Greek banks, then Europe as we know it (or not) "has failed."

The problem is that Greece would be, in the eyss of the ECB, no longer part of the monetary union, so as Dijsellbloem said yesterday, it is the Greek government's problmen - in other words, Europe thinks it has won the "blame game", and the loser is Greece.

The whole BBC interview can be heard here:

And of course, in keeping with the diplomatic strategy of Greece, which has been to promptly deny everything it has just said, Varoufakis did just htat.

But admit or deny, it no longer matters: moments ago the ECB announced it has frozen the Greek ELA at its Friday level even as the Greek bank run has claimed at least another €1 billion in deposits according to media reports (ahead of its formal pulling just after midnight on Tuesday when Greece is no longer in an official bailout program), and as such it is only a matter of time before the entire ELA bailout is unwound a la Cyprus in March 2013.From the ECB:

ELA to Greek banks maintained at its current level

•     ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme
•     ECB will work closely with Bank of Greece to maintain financial stability
•     Emergency liquidity assistance maintained at Friday’s (26 June 2015) level
•     Governing Council stands ready to review decision
•     Governing Council closely monitoring situation and potential implications for monetary policy stance

The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.

Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

The Governing Council stands ready to reconsider its decision.

Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.”

Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”

The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.

End result (h/t @NectarAxais):

Average: