The first time the phrase Emergency Liquidity Assistance, or ELA, was used in the context of Greece was in August 2011, when Greece was imploding, when its banking sector was on (and past) the verge of collapse, and just before the ECB had to unleash a global coordinated bailout with other central banks including global central bank liquidity swap and unleash the LTRO to preserve the Eurozone.
As a reminder, this is what happened back then: “In a move described as the “last stand for Greek banks”, the embattled country’s central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night.”
“Although it was done discreetly, news that Athens had opened the fund filtered out and was one of the factors that rattled markets across Europe. At one point Germany’s Dax was down 4pc before it recovered. The ELA was designed under European rules to allow national central banks to provide liquidity for their own lenders when they run out of collateral of a quality that can be used to trade with the ECB. It is an obscure tool that is supposed to be temporary and one of the last resorts for indebted banks.” Continue reading
George Osborne will today deliver a stark warning to Britain’s European partners that the UK will leave the EU unless it embarks on whole-scale economic and political reform.
In a speech to a conference organised by the pro-reform Open Europe thinktank and the Fresh Start group of Tory MPs, Osborne will say: “There is a simple choice for Europe: reform or decline. Our determination is clear: to deliver the reform, and then let the people decide.” Continue reading
Collapse of talks a blow to European balance of power as Kremlin sanctions trump historic trade deal
Twenty years after the collapse of the Soviet Union, Ukraine is slipping back under Kremlin control. Ukraine’s shock decision to opt for Vladimir Putin’s Russia and pull out of EU talks on the eve of an historic deal is a dramatic upset to the European balance of power. It is the first major defeat for the EU in its eastward march since the fall of Communism. While the region’s geopolitics remain fluid, the upset may prove as fateful as the move by the Kossack chief Bohdan Khmelnytsky to turn his back on the West and accept Tsarist suzerainty in the 1640s.
“Ukraine’s government suddenly bowed deeply to the Kremlin. The politics of brutal pressure evidently work,” said Karl Bildt, Sweden’s Foreign Minister. Continue reading
During the early hours of Monday morning, EU leaders agreed to another bailout for Cyprus. The island will receive the €10 billion (us$12.9 billion) it needs to avoid collapse without most Cypriots having money removed from their bank accounts. But Cyprus’s economy has been destroyed. The nation is left as a vassal state of the new German empire.
The deal will be painful for the whole economy. Last week, German Chancellor Angela Merkel said that Cyprus “must realize its business model is dead.” The latest bailout has ensured that realization. Continue reading