As the sorry saga continues the BBC's Robert Peston puts forward the case that the ECB funding for Greek banks is vital but how long can/will it last?
" One of the oddest bits of central banking behaviour in the world right now is that pretty much every week since Greece's financial problems went nuclear again, at the start of the year, the European Central Bank has let it be known in a cloak-and-dagger way that it is still providing cooling fluid to the whole combustible mess"
"So there is probably no more market-sensitive decision being taken anywhere in the world right now than whether the ECB is prepared to keep propping up Greece's bank.
That is why it is somewhat unnerving - to put it mildly - that the ECB doesn't disclose its actions in a normal transparent way, and trusts instead to unattributable briefings.
The point, I suppose, is that the ECB wants to maintain the fiction that the power of life and death over the Greek financial system and economy is actually with Greece's creditors, namely the IMF and eurozone governments.
But hang on a minute, there is another huge creditor as well, which has been intimately involved in the bailout discussions.
It's the European Central Bank, which is owed 20bn euros directly by the Greek government and considerably more indirectly via the collateral placed with it and with the Bank of Greece for credit provided to commercial banks"
Not revelatory and we've discussed it here in the past but worth a full read here
