Regling: ECB Review Will Clarify Greece's Funding Needs

The European banking sector review expected this coming Sunday, October 26, will clarify Greece’s funding needs, said European Stability Mechanism (ESM) head Klaus Regling earlier today.

Regling also stressed that the Eurozone should keep the funds it is allocating for crisis resolution for future use, rather than invest them at the present time. In addition, according to a Reuters report, Regling said that the European Central Bank’s (ECB) asset quality review (AQR) of 130 leading banks would show how much money Greece has left in its existing bank bailout fund as well as how much more the country might need from emergency sources.

“This is not completely clear at the moment because Greece is waiting for the results of the AQR and stress tests,” he said. Greek banks’ bailout fund has a leftover of 11.4 billion euros and Athens intends to use this money as a reserve to cover the country’s funding needs after the exit from the EU/IMF memorandum in early 2015, as the Greek government hopes. Confirming the climate of uncertainty in Greece’s situation, Regling underlined that “there will be continued talks in the next Eurogroup in November-December to decide what to do.”

As he revealed, there were certain countries that wanted to use ESM funds to support growth but it was necessary to have a buffer because “at a crisis situation, it is important to have a lot of unused firepower,” adding that “we all know, that as we move out of this crisis, there will be another crisis one day.”

ESM’s role is to safeguard and provide instant access to financial assistance programs for Eurozone members suffering economic crisis and it has a maximum lending capacity of 500 billion euros. Currently, Berlin is opposing the scenarios of adding tasks to the Mechanism, as a change in the fund’s mandate would need the participation of all 18 Eurozone members.