The European Central Bank (ECB) is sending a message to the euroarea's leaders: Don't make us pull the trigger on Greece'sbanks.
After the Frankfurt-based ECB blessed the expansion of so-calledEmergency Liquidity Assistance (ELA) to the debt-stricken country'slenders by about 5 billion euros (US$5.7 billion) on Thursday,officials are insisting that continued support is contingent onpolitical talks over Greece's bailout. Greek stocks and bondsrallied Friday, after Prime Minister Alexis Tsipras hinted atprogress.
The ECB does not want to be pushed into a position where it ismaking decisions on the future of the Greek banking system—and thecountry's membership in the Eurozone—without political cover fromEuropean capitals. If talks on a “bridge” financing deal for Greecebreak down again, ECB President Mario Draghi will have to weighwhether to ration funds further or threaten a veto, just as he didin Cyprus two years ago.
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