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ECB maintains emergency credit for Greek banks

The ECB has decided to maintain its program of emergency funding to Greece's banking system at its current level. Pressure has been mounting on the country's banks after talks between Athens and its creditors collapsed.

The European Central Bank (ECB) made the decision not to cut its cash lifeline to debt-hit Athens during talks in Frankfurt on Sunday.

"The Governing Council decided to maintain the ceiling to the provision of Emergency Liquidity Assistance (ELA) to Greek banks," the bank said in a statement. But the ECB also said it would not raise the amount

Greece's banking system

has come under increasing pressure

after Saturday's cash-for-reform talks between Athens and its international creditors - the ECB, the International Monetary Fund (IMF) and the European Commission - failed to reach a deal.

Without further funding help, Greece is likely to default on a 1.5 billion euro ($1.7 billion) repayment to IMF due on Tuesday.

Greece has been

locked in negotiations with its lenders

for months in an attempt to secure an extension on a bailout loan due to expire on June 30 in return for fiscal reform proposals.

Greek Prime Minister Alexis Tsipras has

called a referendum

for July 5 on whether the creditors' terms should be accepted.

Merkel 'holds the keys'

Greece's banks depend on the ECB's Emergency Liquidity Assistance to keep afloat. ECB President Mario Draghi said Sunday the Frankfurt-based institution would "continue to work closely with the Bank of Greece."

The bank also said it would monitor the situation in financial markets and the "potential implications for the monetary policy stance" in the euro area.

Greek Finance Minister Yanis Varoufakis said on Twitter that cuts to banks funding contradicted the idea of a monetary union.

In separate comments to German daily "Bild," the finance minister also said German Chancellor Angela Merkel had the power to help Greece avert a "terrible" outcome to its debt crisis and reach a deal with creditors.

"The government leaders in the EU have to act. And among them she, the representative of the most important country, holds the keys in her hand," Varoufakis said, referring to Merkel. "I hope she uses them."

Varoufakis added that Greece was open to further negotiations, but stressed it would not put forward any new reform proposals.

The Greek government is expected to meet later Sunday to consider whether to impose capital controls and shut the country's banks on Monday.

nm/ng (Reuters, dpa, AFP)

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