German Federal Bank

Debt in the euro zone has entered the "danger zone," the head of Germany's Bundesbank said on Friday, calling for banks' exposure to the debt of individual countries to be capped.

Germany's Bundesbank chief, Jens Weidmann, said on Wednesday Greece was still far from the end of its «marathon» reform process and that it would be «tragic» if Athens gave up the economic adjustments it has already made.

The European Central Bank increased the maximum Emergency Liquidity Assistance that Greek banks can get from their national central bank by 600 million euros ($637 million), according to two people familiar with the decision.

Greece has lost a lot of trust and eurozone governments must decide whether to expand their risk exposure to Athens, European Central Bank policymaker Jens Weidmann said on Thursday.

One option the Greek government has looked at to fund itself is for the ECB to raise a cap on Athens' issuance of Treasury bills, or short-term debt.

The European Central Bank on Thursday denied a report in a German newspaper that it would feel more comfortable if Greece introduced capital controls to stem the outflow of deposits from its banks.

The European Central Bank would feel more comfortable if Greece introduced capital controls to stem the outflow of deposits from the country's banks, the Frankfurter Allgemeine Zeitung (FAZ) reported on Thursday, citing central bank sources.

By Costas Iordanidis

The Greek government has been perceived by many, rightly or wrongly, as slightly mad and irrational, a variable that upsets the status quo set by Berlin when the euro was introduced, based on Bundesbank directives and Germany?s traumatic past.

By John O'Donnell and Paul Carrel

The European Central Bank faces resistance from Germany to allowing any extra emergency lending for Greek banks, people familiar with the matter said, increasing pressure on Athens to sign up to an extended aid-for-reform program.

Additional debt relief will not help pull Greece out its current crisis, the head of the German central bank or Bundesbank, Jens Weidmann, said on Thursday.

The head of Germany's powerful Bundesbank warned Greece against using emergency funding to prop up its banks long-term and said countries must bear the impact of their decisions, further isolating Athens after it all but ditched a reform-for-aid deal.