Greek banks are facing a serious liquidity problem as in the first three days of the week, depositors withdrew a total of 4.2 billion euros.
A week ago, the four major Greek banks had proactively asked for Emergency Liquidity Assistance (ELA) from the European Central Bank. The ELA has been approved for two weeks, according to reports. Any extension of the mechanism can be repeated in 15 days, during the next session of the ECB’s board of directors.
As elections approach, political uncertainty has generated a bank run. From Monday through Wednesday, total outflow was counted at 4 billion euros. Financial analysts forecast that by the end of elections week the outflow will reach 4.5 billion euros.
On Wednesday alone, 1.8 billion flew out of Greek banks. The outflow was higher than expected and indicates that it will continue after Sunday’s general elections.