(AA) — The European Central Bank is making a $5 billion emergency loan to Greek banks, the bank announced on Thursday.
The country’s banks are seeing a run on their deposits, as Greeks remove their savings out of concern that the bailout crisis will not be resolved.
Outflows from Greek banks were at about $12 billion in January, according to central bank statistics. Analysts estimated current outflow at about $1 billion.
But a sharp rise in outflow may be expected if the meeting between the Greek government and its international creditors on Monday does not show progress.
The European Central Bank has stopped accepting Greek bonds and state-guaranteed bank bonds as collateral for bank funding. This means that the only source Greek banks have for euro liquidity is emergency funding from the European Central Bank.
The newly-elected Greek government has announced that it did not wish to extend the bailout deal to enable the country to maintain payments on its €316 billion ($357 billion) debt.
Greece has until Feb. 28 to come to an agreement with its international creditors or the government will run out of public funds.