ECB raises funding for Greek banks, Europe backs new loan

The European Central Bank has increased funding to Greek banks by €900 million a week. 

ECB president Mario Draghi said that the bank’s total exposure to Greece now stood at €130 billion and that debt relief for Greece was “necessary”.

Addressing a press conference in Frankfurt, he said that the ECB has continued to act on the assumption that Greece will remain a Eurozone member.

“Things have changed now,” Draghi said. “We had a series of news with the approval of the bridge financing package, with the votes, various votes in various parliaments, which have now restored the conditions for a raise in Emergency Liquidity Assistance.

The ECB has also decided to maintain its massive bond-buying programme at €60 billion a month. The programme had been launched in March to prevent the Eurozone sinking into deflation and to weaken the euro so as to boost exports and consumer spending.

Earlier today, Eurozone finance ministers agreed to give Greece a €7 billion bridging loan to keep it afloat until its €86 billion bailout can be approved.

The decision was made after Greek Prime Minister Alexis Tsipras won a parliamentary vote late on Wednesday by 229 votes to 64. The vote was won thanks to the support of opposition MPs, with 38 Syriza MPs rejecting the reforms.

Dissidents included former finance minister Yanis Varoufakis and parliamentary speaker Zoe Konstantopolou.

By 22 July, Greece must commit to a major overhaul of the civil justice system. It also has to agree to further privatisation, to review collective bargaining and industrial action, and reform the market, including by allowing Sunday trading.

Opponents of the reform took to the streets of Athens in mainly peaceful protests ahead of Wednesday’s votes. However, one protest group tossed petrol bombs at police officers who responded with tear gas.