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Greece Cannot Rely on ECB to Dodge Funding Crunch

European Central Bank (ECB) President Mario Draghi addresses an ECB news conference in Frankfurt, Jan. 22, 2015.

Greece cannot rely on the European Central Bank to raise a limit on Athens' issuance of short-term debt, ECB President Mario Draghi suggested on Thursday.

He also said the rules meant the ECB could not buy Greek bonds under its new asset-buying program.

Asked about the short-term debt limit at a news conference following the ECB's meeting in Cyprus, Draghi said that the bank was prohibited by European rules from direct or indirect financing of governments.

"The ECB is a rule-based institution. It is not a political institution," Draghi said.

Athens is running out of options to fund itself despite striking a deal with the eurozone in February to extend its bailout by four months. Faced with a fall in revenues, it is expected to run out of cash by the end of March, maybe sooner.

One funding option would be to raise a 15-billion-euro ($16.69 billion) cap on Athens' issuance of Treasury bills, or short-term debt. The cap has already been reached, and the ECB
has a veto over lifting it.

The cap is sensitive because Greek banks have used the T-bills to access central bank funding and then invest in more T-bills, helping the state cover its short-term needs.