The ECB stepped in once again to help prop up Greek banks last Friday with an exceptional round of Emergency Liquidity Assistance funding as a record amount of euros were withdrawn from the Greek banking system. This may not however be enough to stem the exodus as today’s crunch summit gets underway to try and end the impasse. It is estimated that not much over €100 billion is deposited in Greek banks, well under half of what they were at the height of the banking crisis seven years ago and without a deal today we can expect that to fall below €100 billion rapidly, as it will call into question whether the ECB is willing to continue to assist with further ELA. The ECB has kept the ELA for Greece for as long as negotiations have been on going, but no deal today could mark the beginning of the end and the imposition of capital controls.
One thing you cannot fault is the political resolve to see a deal done, without which Greece would have been given its marching orders long ago. This optimism is giving investors an excuse to buy risk assets this morning with a strong bounce in European equities, in particular the German Dax up over 2.5%, meanwhile the euro is holding up well with EURUSD at 1.1385.