The European Central Bank has stopped providing liquidity to some Greek banks as they have not been successfully recapitalized, the ECB said on Wednesday.
Greek banks have been experiencing strong withdrawls of euro (800 million per day), as citizens prepare against possible exit from the euro & devaluation of their deposits.
Withdrawls are running strongly, but have so far remained orderly & not panicked or broken into a ‘bank run’. However, closure of liquidity facilities — by the ECB, or later, by Greek authorities — could well cause remaining depositors to panic.
News sent the euro lower against the dollar, fanning concerns among investors and in Greece that the country may have to leave the euro zone.