ECB extends Cyprus emergency funding until Monday

The European Central Bank said on Thursday it had decided to allow the central bank of Cyprus to keep providing banks with emergency funding until next Monday.

With Cyprus sovereign bonds ineligible for use as collateral for ECB refinancing operations due to their low credit ratings, the Cypriot central bank is providing banks with Emergency Liquidity Assistance (ELA).

The ECB's Governing Council must approve provision of ELA.

"The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013," the ECB said in a statement.

"Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF program is in place that would ensure the solvency of the concerned banks," it added.

(Reporting by Paul Carrel and Eva Kuehnen)