While we await for Germany to deny the latest "Greece is fixed" report which came out moments ago according to which Merkel "may be satisfied with Greece committing to at least one economic reform sought by creditors to open the door to bailout funds" as Bloomberg reported earlier citing "two people familiar with Germany’s position" - a move which would be seen as Germany blinking to Greek demands and may well lead to Schauble's resignation if confirmed - below is a quick update of what is going on with Greek bank liquidity.
It is not good.
As the chart below shows, following last week's "massive" surge in Greek bank runs, which soared on Friday [6]as pessimism returned with a bang that another "can kicking" deal may not get done after all, Greek Emergency Liquidity Assistance, or ELA, use soared by €2.3 billion according to Bloomberg, the single biggest weekly increase since February, rising to €83 billion. This, of course, is happening as Greek bank deposits continue their dramatic drop and which according to recent reports by Kathimerini had dipped under below €130 billion.
[7]
Which brings up the question of the "other" parity: while everyone has opined on when/if the EURUSD will hit 1.00, for Greece a far more relevant question is whether the ECB's generous ELA funding of insolvent Greek banks will reach parity with the amount of Greek deposits in the bank system.
Below is a chart showing the history of Greek ELA increases.
[8]
Keep a close eye on the weekly increases in this series because once the amount of ELA eclipses all Greek deposits, that may be the point when the ECB finally cuts its losses, and leaves the Greeks with the total "bail-in" wipeout.
