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You can't help feeling a little sorry for the President of the European Central Bank (ECB). The normally smiley Italian President of the bank, Mario Draghi, should be celebrating a slight resurgence of the euro zone economy, but instead finds himself trapped in the center of the latest storm over Greece.
The euro zone's central bank, still aiming to counter deflation by printing 60 billion euros-a-month ($66 billion), is set for a rate decision on Thursday. Draghi, himself, will know only too well that the institution is strictly independent and can't be seen as politicizing any situation that Greece finds itself in.
Sadly for Draghi, a baying pack of journalists await him on Thursday to ask him exactly the type of questions he doesn't want to answer: What's up with Greece's banks?
"The focus will remain firmly on the ECB's next move on ELA (emergency liquidity assistance)," says Frederik Ducrozet, a euro zone economist at Credit Agricole, in a note on Monday.
The ECB has helped out the Greek banking industry through Emergency Liquidity Assistance (ELA): a series of loans given to Greek lenders to help with their solvency. The ECB dishes out these loans, but they actually come from the central banks of each individual euro zone country.
The ECB has been maintaining its ELA cap to Greece at 89 billion euros. However, last week it decided to increase the amount of collateral that Greece needed for these loans -- a move seen by some as deeply political at a time when Greece was still deciding on whether to accept creditors' tough austerity terms.
Draghi will no doubt have to justify this move in front of the cameras, as well as any increase in cash to Greece, provided the debt-stricken country votes in the new bailout terms on Wednesday.
"A gradual, step-by-step increase in ELA looks likely, starting this week, conditional on the implementation of prior actions by the Greek government," said Ducrozet, who is not alone with this viewpoint.
Eirini Tsekeridou, a fixed income analyst at Julius Baer, said in a note Tuesday that he expected the ECB will keep its lifeline to Greek banks until the negotiations are completed.
"(The ECB) will probably only choose to increase (the ELA) after the Greek parliament approves the prerequisites on Wednesday." he said.
Analysts at both Wells Fargo and Credit Suisse have issued very similar predictions in their own research notes this week. The former noted that this extra liquidity is needed in the Greek banking system "because it is effectively insolvent."
Draghi's latest test will come just days after he was involved in tense overnight talks in Brussels. The fierce wrangling over Greece's debt problems allegedly saw Wolfgang Schäuble, the German finance minister, snapping and fuming at the ECB head, according to the Financial Times.
Who'd be a central banker?