The European Central Bank is tightening the rope with Greece. The bank intervened yesterday in the negotiations between Athens and the Troika by threatening with the cancellation of credit to all Greek banks. This measure is meant to force Greece to request another bailout and to continue the vicious circle the ECB has mandated.

Frankfurt announced just after 9 p.m. to cut of liquidity to Greek banks beginning next Wednesday, which would mean serious difficulties to successfully close the current agreement with the government and to add an extension or a new program to continue the so-called financial rescue.

Mario Draghi is squeezing hard but not drowning the Greek banks as the lines of emergency funding are being closed. But those lines, known as ALS, are now more restrictive and more expensive than the window of the ECB. The measure of will make it even more expensive to finance the costs of the debt for both the banks and the Greek State.

In a political move of the first order, Draghi obliges the Government of Alexis Tsipras to negotiate around the clock, with the predictable market pressure. The euro dropped almost 1% in a few minutes, and Wall Street profits rose from the losses.

None of the countries that have submitted to the demands of the ECB have done so willingly and that is why it has been the ECB itself the one always pushing during the negotiations by strongly pressing on banks and governments, such as in the cases of Ireland, Portugal, Spain and Greece itself .

That old story repeats itself. The ECB accepted that banks placed Greek debt as collateral even though its rating is in tatters, with the excuse that Athens was protected under the umbrella of a program. That has changed.

The Government of SYRIZA refuses to ask for an extension and therefore another bailout won’t be requested either. The new government has decided to close the second aid program by refusing the conditions of creditors who want more cuts.

Athens hoped that the ECB would allow Greek banks to continue with the status quo, following a meeting between Finance Minister, Yanis Varufakis, and the heads of the European Central Bank.

But the ECB does not trust the newly elected Greek goernment and has officially closed access to liquidity “as it has been concluded that the program will not end successfully,” said a statement from Frankfurt. The Greek banking system is now at the mercy of the National Bank of Greece.

Greece hoped to finance its operations by issuing short-term debt bonds. These bonds would be purchased by Greek banks and then placed on the ECB debt balance sheet. Now, with the end of European liquidity, Greek banks will have to put the debt in the Greek Central Bank. This means Greece will be issuing and buying its own debt.

So far, the ECB limited the amount that banks could place onto its balance sheets and no decision has been made on whether to increase or reduce that amount. That technicality could end up changing everything.

If the ECB requires the central bank to restrict Greek debt, it would change Greece’s chances of surviving without a bailout or an extension.

“It is imperative that Greece and partners reach an agreement to avoid a serious problem in the coming weeks,” said analyst Kirshna Guha.

Tsipras met in Brussels with the Presidents of the European Commission, Jean-Claude Juncker; European Council, Donald Tusk, and European Parliament, Martin Schulz, and he left with a bitter taste and heard a harsh tone about his chances of negotiating the conditions for the future of Greece.

Now, with the announcement of the ECB, the situation seems to have turned even more difficult.

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