LOS ANGELES, CA (Catholic Online) - Extensive use of "emergency liquidity assistance" to assist banks in the weakest economies has been one of the less-noticed features of the eurozone crisis.

Separate from normal supplies of liquidity and intended as a temporary facility for national authorities to use when banks hit problems, ELA has proved invaluable for the financial system Ireland. The ELA is needed now even more so in Greece. As such, it has given the ECB, which has ultimate control over the facility, considerable power to determine countries' fates.

Whether this institution can really lower the boom is unclear. ELA is a subject on which the ECB is very hesitant to provide information, where or when it is provided.

"You don't say when you are in an emergency situation, because then you make the situation worse. So I really don't see the usefulness of being more transparent," Luc Coene, Belgium's central bank governor told the Financial Times.

The ECB's guard slipped a little late last month. Its weekly financial statement published last month showed an unexpected €121 billion increase in the innocently titled heading "other claims on euro area credit institutions." By definition, €121 billion was the minimum amount of ELA being provided by the "eurosystem," the network of eurozone central banks.

Analysts have since pieced together more details by scouring ECB and national central bank statements. Analysts at Barclays figure that Greece is now using €96 billion in ELA, with Ireland accounting for another €41 billion and Cyprus €4 billion. If correct, total ELA in use has exceeded €140 billion - more than 10 percent of the amount lent to eurozone banks in standard monetary policy operations.

Because of the risks of extra liquidity creating inflation, ELA in excess of €500 million requires approval by the ECB's 23-strong governing council: its use can be stopped if two-thirds of the council opposes an application.

More specifically, the risks fall on the relevant national central bank, rather than being shared across eurozone central banks as with normal liquidity. 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 rate they pay.

Coene says the ELA had to be cut off once banks became insolvent. "It is emergency liquidity assistance - not solvency assistance," he said. The secrecy surrounding ELA creates grey areas, however.

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