ECB’s Nowotny Sees ‘Difficult Situation’ If No Greek Deal Today

A lack of a deal on Greece’s finances on Monday would put the European Central Bank in a difficult position as it considers more aid for the country’s lenders, ECB Governing Council member Ewald Nowotny said.

The ECB’s decision to raise emergency funding for Greek banks earlier in the morning is valid only “for today,” Nowotny told reporters in Vienna. European leaders will meet in Brussels later on Monday to discuss Greece’s bailout package and reform proposals.

“Once the result is known, the ECB will have to make a judgment if under our rules another extension is possible” for Emergency Liquidity Assistance, said Nowotny, who heads the Austrian central bank. Should the Brussels talks fail, “we have a very difficult situation and we need to talk about it.”

Euro-area finance ministers met in Brussels on Monday before the emergency summit. Dutch Finance Minister Jeroen Dijsselbloem said an agreement could be reached this week after latest proposals by the Greek government were seen as a “positive step.”

The Greek central bank received approval to increase ELA to 87.8 billion euros ($99.8 billion) on Monday, and another review will take place within 24 hours, according to people familiar with the matter. The limit was increased by 1.1 billion euros to 84.1 billion euros on Wednesday, and by a further 1.8 billion euros on Friday. An ECB spokesman declined to comment.

ECB President Mario Draghi said last week that liquidity will be extended to Greek banks as long as they are solvent and have sufficient collateral. He also said the ECB is monitoring closely to see if those conditions change. Draghi will meet Greek Prime Minister Alexis Tsipras at 6 p.m. in Brussels, according to an e-mailed statement by Tsipras’s office.

“The question is not the technical option but the question is if the conditions are met,” Nowotny said. “The ECB has rules to observe, and they don’t make things easier.”