“The implication is that Greece may well need to sign up to a further European programme by the end of June. And the domestic politics underlying that decision appear particularly difficult for the Greek government. Put bluntly, another flare up in the debate around Greece’s future within the currency area cannot be discounted,” the same experts pointed out.
Given the deposit outflow, ELA borrowing is crucial for Greek banks to fill the funding gap.
“Any limitation in ELA or rise in haircuts on ELA collateral might create funding problems, potentially escalating the crisis,” Barclays’ Giuseppe Maraffino, Francois Cabau pointed out.