Latest BoG data show that Greek banks’ ECB funding rose by €13.7bn m-o-m to €19.3bn in December from €5.6bn in November. At the same time, BoG liquidity provided to Greek banks through the ELA mechanism dropped €21.4bn m-o-m to €101.9bn in December from €123.3bn in November. It is reminded that there had been a major shift of c€23bn from ECB to ELA funding in October, with ECB/ELA mix remaining almost stable in November, while a reverse in the mix change evident in the past two months was recorded in December.

Overall, Greek banks’ Eurosystem (ECB plus ELA) funding fell for fourth consecutive month by €7.7bn or 6.0% m-o-m to €121.1bn in December, from €128.9bn in November and €129.3bn in October, reaching its lowest level since April ’12. It is noteworthy that Eurosystem funding had peaked to €157.1bn in February ’12, while follows a declining trend over the past four months, with a material acceleration in December, recording a cumulative decrease of €10.5bn since August ’12 (of which €7.7 were recorded in December), largely attributed to a similar amount of deposit inflows.

Regarding the mix between ECB and ELA, it is noted that ECB funding had recorded a sharp drop in July ‘12 (-€49.7bn) with a consequent increase in ELA liquidity (+€44.4bn), since GGBs were not accepted as collateral by ECB as of July 25, ‘12. In particular, ECB had announced on July 20, ‘12 that “due to the expiration on July 25 of the buy-back scheme for marketable debt instruments issued or fully guaranteed by the Hellenic Republic, these instruments will become for the time being ineligible for use as collateral in Eurosystem monetary policy operations”. On December 19, following Eurogroup’s formal decision on the disbursement of the next tranche to Greece, ECB decided to suspend the previously imposed non-eligibility a development expected to further shift Greek banks’ Eurosystem funding towards the less expensive ECB funding.