The ECB and European Union rushed to reassure financial markets on Thursday that help is at hand for Greece as it heads for a high-risk exit from its debt-rescue programme.
The European Central Bank, which manages how funds are fed into the eurozone economy, is promising an extra cash lifeline for Greek banks if the government sticks to its bailout programme, the Greek central bank said.
And in Brussels, the European Union said that it would go on helping twice-bailed out Greece "in whatever ways necessary", as European stock and bond markets shook in sudden convulsions at the state of the single-currency bloc.
"There will be no doubt that Europe will continue to assist Greece," said Simon O`Connor, spokesman for the EU`s Economic Affairs Commission.
The decision on extra help for Greek banks was taken late on Wednesday by ECB bank governors in Frankfurt after the Athens stock market plunged for two days in running.
Yields on Greek bonds had shot up as investors worried about the government terminating the bailout plan. On Thursday the 10-year bond yield rose further to 8.656 percent from 7.854 percent.
The ECB has decided to reduce the markdown on the value of assets which Greek banks have to put up to borrow cash.
This will have the effect of making up to an additional 12-15 billion euros available to them.
The Athens stock market plunged 5.7 percent on Tuesday and 6.3 percent on Wednesday, while the yield on its 10-year bonds jumped to 7.94 percent. It was down 1.9 percent on Thursday.
Analysts have said investors are concerned that Greece will not be able to stand on its own two feed if, as the government has signalled it may do, it terminate its IMF programme early.
Greece`s EU aid ends in December, but under its IMF programme that lasts until 2016 there is still $16 billion.
After four years under a rescue by the IMF, EU and European Central Bank -- the so-called troika -- worth about $300 billion overall, Athens has largely repaired its finances.
The country is eager to get free from the tight budgetary and policy auditing exercised by the International Monetary Fund, European Union and European Central Bank.
Political uncertainty has also sapped market confidence.
Analysts see an early bailout exit as a move to bolster the political fortunes of the centre-right, socialist coalition government of Prime Minister Antonis Samaras.
The strict bailout conditions have led to the left-wing anti-austerity Syriza party taking the lead in opinion polls, outpacing the coalition parties together.
Political observers believe exiting the bailout would help Samaras gain the extra votes the coalition needs to ensure the election of a president next year, without which an early vote would be triggered.
French Finance Minister Michel Sapin said Thursday in Paris that" Greece still has need for help".
He said the country had made considerable progress "but you have to pay the attention to when you venture out alone on the international markets."
