ECB wary of rushed judgment on Greece before politicians react

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http://www.ekathimerini.com/198997/article/ekathimerini/business/ecb-wary-of-rushed-judgment-on-greece-before-politicians-react



ECB wary of rushed judgment on Greece before politicians react
JEFF BLACK
BUSINESS 06.07.2015 : 00:17

The European Central Bank may choose to buy time for politicians to discuss the referendum that has left Greece’s finances hanging by a thread.

While the Governing Council is due to talk on Monday on whether to keep supporting the country’s crippled lenders, it’ll probably be reluctant to preempt a planned meeting of euro-area leaders. German Chancellor Angela Merkel and French President Francois Hollande spoke late Sunday, and European Union President Donald Tusk called a euro-area summit for Tuesday.

A popular vote to reject the terms of an EU-led bailout has left Greece on the verge of running out of money, trapping the ECB between the moral hazard of funding a system close to bankruptcy and the dramatic consequences of shutting it off. Given the risk of splintering the euro, ECB President Mario Draghi and his colleagues have so far signaled they’ll take their lead from elected representatives.

“It is clear that the ECB has no appetite to front-run the political process,” Michala Marcussen, global head of economics at Societe Generale SA in London, said in a note on Sunday. “As long as discussions are ongoing between the Greek administration and the euro area, we consider it unlikely that the ECB would fully cut the Emergency Liquidity Assistance and Greek banks’ access to ECB liquidity facilities.”