FRANKFURT, Germany - May 21, 2012 - There has been no official announcement; no terms or conditions have been disclosed. But Greece’s banking system is being propped up by an estimated 100 billion euros of emergency liquidity provided by the country’s central bank - approved secretly by the European Central Bank in Frankfurt. If Greece were to leave the eurozone, the immediate cause might be an ECB decision to pull the plug.

Extensive use of “emergency liquidity assistance” (ELA) to help banks in the weakest economies has been one of the less-noticed features of the eurozone crisis. Separate from normal supplies of liquidity and meant originally as a temporary facility for national authorities to use when banks hit problems, ELA proved a lifesaver for the financial system in Ireland and is now proving more so in Greece. As such, it has given the ECB - which has ultimate control over the facility - considerable power to determine countries’ fates.

The ECB’s guard slipped a little late last month. Its weekly financial statement, published on April 24, showed an unexpected 121 billion euro increase in the innocently titled heading “other claims on euro area credit institutions,” the result of putting all ELA under the same item. By definition, 121 billion euro was the minimum amount of ELA being provided by the “eurosystem” - the network of eurozone central banks.

By scouring ECB and national central bank statements analysts have since pieced together more details. For instance, analysts at Barclays reckon Greece is now using 96 billion euros in ELA, with Ireland accounting for another 41 billion euros, and Cyprus 4 billion euros. If correct, total ELA in use has exceeded 140 billion euros - more than 10% of the amount loaned to eurozone banks in standard monetary policy operations.

The risks fall on the relevant national central bank, rather than being shared across eurozone central banks as with normal liquidity - although there would be a general hit if a country left the eurozone. However there is no theoretical limit to the amount of ELA that can be provided - and no information, for instance, what collateral recipient banks have to provide as security or what interest rates they pay. Ireland’s example shows that the supposedly temporary use of ELA can also be prolonged.

“Cutting off ELA would be the way to push Greece out of the eurozone - if that was wanted, or if Greece really wanted to leave. But I don’t think the ECB is going to take that decision,” said Laurent Fransolet, Barclays analyst. “I think the ECB would go to the political powers and have them take the decision”.