ECB 'to end Greek bank lifeline'

The European Central Bank is expected to end emergency lending to Greece's banks by the end of today ( Sunday) reports the BBC.   The country's banks depend on the ECB's Emergency Liquidity Assistance (ELA). Its governing council is meeting later. Greece will probably have to "announce a bank holiday on Monday, pending the introduction of capital controls", says  BBC's Robert Peston. The bailout for heavily indebted Greece expires on Tuesday (30 June) and talks have broken down.

Greek banks would find themselves in serious straits as soon as Monday if the ECB went ahead and cut the lifeline, the BBC economics editor says.

Capital controls are restrictions on how much customers can withdraw from banks. Until now, the Greek government has signalled that it does not want to impose such controls.

In recent weeks, Greeks have withdrawn billions of euros from banks, and long queues formed at cashpoints on Saturday, amid fears that banks would not open on Monday.

The ECB has been sending emergency funds on a daily basis to the Greek central bank, which then allocates it to the high-street banks.

Austria's Finance Minister Hans Joerg Schelling said a Greek exit from the euro now "appears almost inevitable".

But Robert Peston says a "Grexit" from the euro is not inevitable, as the eurozone did resolve Cyprus's banking crisis in 2013 and the country stayed in the euro.

Capital controls were imposed on Cypriot banks, and remained in place for a long time - the last restrictions were only lifted in April this year.

Greece's situation is more difficult, Robert Peston reports. Capital controls are seen as an important step towards leaving the euro, because the single currency's rules require free movement of capital.

But Greece could remain in if its government and the bailout providers - the EU and IMF - can restart constructive negotiations, he reports.

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