Athens: Greece got a temporary lifeline for its banks today to help them cope with a deposit drain in the run-up to a summit of the eurozone's 19 leaders that could determine the country's future in the euro.
Uncertainty has grown after a meeting yesterday on the reforms Greece must make to get more loans ended in acrimony.
Greece has a debt payment on June 30 it cannot afford and a default could eventually see it drop out of the euro. Several European countries are now openly saying they are getting ready for such a possibility.
In the streets of Athens, there were no visible signs of distress or larger than usual lines at banks or supermarkets. Officials, however, signaled an increase in withdrawals and transfers, which can also be made electronically.
An EU official said Greeks had taken about 2 billion euros (USD 2.3 billion) out of their accounts in the last three days.
"Money is going out of the Greek banks faster than at any time before," said the official, who spoke only on condition of anonymity because of the sensitive nature of the situation.
As a result, the European Central Bank's governing council decided today to provide more emergency credit for Greece's banks to help them cope with the situation.
A Greek banking official, who spoke only on condition of anonymity because the announcement was not made public, confirmed the decision. The official declined to give a sum.
The ECB has been steadily increasing the support it allows Greek banks to draw on -- it did so just two days ago. It's not thought it would turn off that tap until it thinks Greece is definitely going bust and certainly not before an emergency summit of the eurozone's 19 leaders on Monday.
However, if no deal emerges with creditors soon that will allow the country to pay upcoming debt payments, starting with one at the end of the month, the ECB would be under intense pressure to stop pumping money into a banking system that might collapse.
The creditors want Greece to agree to new economic reforms and a tighter budget before they give it more loans. Greece's radical left-led government, on the other hand, was elected in January on the promise to end such measures, which may have helped tame the budget deficit but have also increased poverty and unemployment.
Time is running out -- Greece has to pay 1.6 billion euros to the International Monetary Fund on June 30. It cannot afford that without a deal that would unlock 7.2 billion euros in bailout loans.
Relations between the sides have soured in recent days, with each side blaming the other in increasingly strident language.
Around Greece today, newspaper headlines warned time was running out. The daily Ethnos called Monday's summit the "Last Chance for a Deal" while the pro-government Efimerida ton Syntakton said creditors had put a "Knife to our Throat."
