ECB keeping Greece on the rack

Regarding Greece, the ECB will stick to its stance presented in March. Greece's banks will need to continue to resort to ELA financing (€65.6bn in February, said to have increased to €73bn mid-April) until further clarity is reached at the political level. 

In March, the ECB specified that countries wishing to participate in a purchase programme would need a successful review before the ECB would buy their bonds. On the issue of reinstating the waiver on Greek government bonds for ECB collateral, Draghi clarified that there needs to be a "likelihood of a successful completion of a review", implying that the reforms outlined by the Greek government are not sufficient or sufficiently credible in the eyes of the ECB. 

Draghi might also reiterate that the ECB has provided more than €130bn already to Greece (€104bn to banks, €27bn to the government), representing some 73% of Greek GDP) and that rising T-bill purchases by Greek banks would be tantamount to indirect monetary financing, which is prohibited by the Treaty.

"We expect the ECB's March stance on Greece to be maintained and that Greek lenders will continue to resort to emergency liquidity assistance (ELA) financing (said to be €73bn) until further clarity is reached at the political level." - says Societe Generale in a report on Monday