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German Bundesbank President Jens Weidmann criticized in Frankfurt on Thursday the continued provision of Emergency Liquidity Assistance (ELA) to Greek banks.
"When banks without access to the markets buy debt of a sovereign which is likewise locked out of the market, taking recourse to ELA raises serious monetary-financing concerns. The Eurosystem must not provide bridge financing to Greece even in anticipation of later disbursements," he said.
Weidmann noted that Greek banks that receive ELA should be urged to "do their utmost to improve their liquidity situation and be prevented from worsening it further by rolling over illiquid T-bills of their sovereign".
ELA now stands at nearly €89 billion.
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