Europe Economy

ECB raises emergency funding to Greek banks

Things have changed in Greece: Draghi
Debt relief is necessary for Greece: Draghi
Will we see a default from Greece?
ECB to raise emergency funding

The European Central Bank (ECB) has hiked its emergency lending to Greek banks, raising hopes that lenders may be able to open their doors after more than two weeks of closures.

Speaking at the ECB's monthly press conference Thursday, bank president Mario Draghi confirmed that the bank would up its funding to lenders in Greece by 900 million euros ($978 million) over one week.

It comes after the Greek parliament voted in favor of an austerity reform package in the early hours of Thursday morning, paving the way for a bailout program.

Read MoreECB throws Greek banks a lifeline

European Central Bank President Mario Draghi
Francois Lenoir | Reuters

"We have today accommodated the Bank of Greece request, though scaled to one week. We want to see how the situation will evolve," Draghi said, speaking from the ECB's headquarters in Frankfurt.

Following news of the extra funding, Reuters reported that Greece's banks, which had been closed for more than two weeks, would be reopened on Monday. However neither the Central Bank of Greece and the Hellenic Banks Association could confirm the report.

Now entering the third week of a bank shutdown, even with a cap of 60 euro on withdrawals, Greek depositors have been pulling an estimated 80 to 100 million euros a day from ATM machines.

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.

Read MoreGreek banks starved for cash

Before the extension, the ECB had been maintaining its ELA cap to Greece at 89 billion euros.

The ECB also opted to keep interest rates unchanged at record lows and in an effort to counter deflation, it maintained its asset purchase program at 60 billion euros-a-month ($66 billion).

Draghi was forced to fend off a heavy round of questioning on the Greek bailout situation and the emergency funding extended to Greek banks, as he noted that debt relief for the cash-strapped country is necessary but said that there was no decision to write down any of Greece's debt pile.

"There was no decision on haircuts, we have raised it before and we took no decision today," he said.

"If things continue to proceed in a positive way as they have done in the last two days we will have have a phase during the Bank of Greece and the ECB, which are working very actively in monitoring the situation, will look at exactly the needs of the Greek economy," Draghi added.

The ELA decision follows the Greek parliament's decision to push through the austerity bill in the early hours of Thursday morning that should ultimately unlock financial aid worth 86 billion euros ($94 billion). The bill was approved with 229 votes in the 300-seat chamber. There were 64 votes against it and six abstentions.

Speaking the the Greek approval of creditors' austere lending conditions, president of the Peterson Institute for International Economics, Adam Posen said the approval was not a surprise, but the "un-European" response from Germany and Finland to the situation was.

Read MoreGreece approves tough austerity: What next?

"This is what happens when you have absolutely no leverage in a negotiation, it doesn't mean it is the right outcome. The surprise was how 'un-European' Germany and Finland were in the last couple of days when they could have chosen to be a little more generous. That was the surprise," Posen, who is also a former member of the Bank of England's Monetary Policy Committee, said.

"It is a terrible human situation, we shouldn't sugar coat it at all - it is in welfare and human terms for the people in Greece and particular the poorer people in Greece, the pensioners.There should be no joy at this. Where the IMF has it right is their just isn't the payment capacity in Greece for this kind of debt, the German's and French and others have lent to them. The Germans and French and others should take the loss," he told CNBC.

The euro climbed slightly to trade around $1.09 after Draghi spoke, having fallen to a six-week low of $1.088 against the dollar on Thursday ahead of the ECB's decision. The dollar rallied after hawkish comments from the Federal Reserve on Wednesday put a September interest-rate rise back on the table.

Meanwhile, European equities were in positive territory after Draghi's speech, hanging onto gains seen earlier in the session following the approval of the reform plan.

-- CNBC's Matt Clinch contributed to this report