Government Pressure on Greek Central Bank Said to Rile ECB

The European Central Bank is increasingly concerned by a deteriorating relationship between the Greek government and the country’s central bank, people familiar with the matter said.

Recent government comments targeting the Bank of Greece have been noted at the Frankfurt-based ECB, which is responsible for monitoring the legally-mandated independence of central banks in the European Union. The ECB may issue formal warnings to the Greek government if the situation worsens, the people said, who asked not to be named as the matter isn’t public. An ECB spokesman declined to comment immediately.

The government has accused Bank of Greece Governor Yannis Stournaras of attempting to undermine the administration through leaks to the media as the country negotiates with its creditors to try to avoid a default. The Greek central bank has denied sending an anti-government e-mail to a journalist. Stournaras, 58, was finance minister in the previous Greek government.

The ECB has intervened in recent cases where members of its Governing Council, which is made up of representatives from the euro-area’s 19 members, have complained of bullying from their government. In 2013, ECB President Mario Draghi complained to the government of Cyprus after a spat between Governing Council member Panicos Demetriades and President Nicos Anastasiades. Demetriades later resigned.

The ECB is providing a lifeline to Greek banks by approving Emergency Liquidity Assistance to counter deposit withdrawals as the nation’s bailout talks drag on.

The country’s economy fell back into recession in the first quarter, data from the European Union’s statistics office showed on Wednesday. The contraction makes it harder for Prime Minister Alexis Tsipras to meet conditions set by euro-region governments and the International Monetary Fund for aid payments.

Greece’s government will have to raise at least 3 billion euros ($3.4 billion) to meet the minimum budget targets acceptable to creditors, according to an official with knowledge of the discussions.

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