ECB maintains emergency liquidity assistance to Greek banks

(FRANKFURT) - The European Central Bank's governing council has decided to maintain the emergency liquidity assistance (ELA) lifeline to Greek banks at the level set on June 26, the Frankfurt-based bank said in a statement.

The ECB's council held a telephone conference call Monday evening on Greece's cash crisis after Greek voters rejected further austerity measures in a bailout referendum Sunday.

The eurozone central bank also noted that ELA can only be provided against sufficient collateral and for Greek banks that collateral relies to a "significant extent" on assets linked to the debt-wracked government.

"In this context, the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA," the statement said without giving further details.

The ECB was "closely monitoring the situation in financial markets" and any impact on "the balance of risks to price stability in the euro area," it added.

ELA is currently the only source of financing for Greek banks, and therefore the Greek economy. But with Greece's bailout programme now officially expired and in the absence of any new programme, the conditions for its continuation are no longer met.

But analysts predicted that the ECB would not want to be the one to pull the plug on Greece and force the country out of the single currency.