February 13, 2015 / 7:51 PM / 4 years ago

Greece needs political deal with Europe to stop deposit outflows: Constancio

COVENTRY, ENGLAND (Reuters) - Greece and the rest of the euro zone need to come to a political agreement over the country’s debt crisis in order to stop the outflow of deposits from Greek banks, the European Central Bank’s vice president said on Friday.

Speaking at the Warwick Economics Conference, the ECB’s Vitor Constancio said the outflow of deposits from Greek banks was a problem to which he would welcome a fast solution.

“We certainly hope very much that an agreement will be reached because that would take care of a further threat of outflows. So it’s a very sensitive issue,” he said.

Earlier Greek banking sources told Reuters the ECB had allowed Greek banks access to extra emergency financing from the Bank of Greece because deposit outflows have picked up ahead of talks in Brussels next week.

One source said recent daily outflows were in the region of 300 million to 500 million euros on average and that on some days outflows may have totaled as much as a billion euros.

The ECB on Thursday raised the cap on what Greek banks can get from the Bank of Greece through the Emergency Liquidity Assistance (ELA) window by about 5 billion euros to 65 billion euros. The extension will run until Feb. 18 when the ECB Governing Council will reappraise the situation.

Asked about a potential Greek exit from the euro zone, Constancio said: “It’s not for the ECB to decide that, of course. That is a fundamental political issue that is being addressed and has to be in the end a decision by the governments themselves. I certainly hope that it won’t happen.”

Reporting by Jemima Kelly; Editing by Louise Ireland

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