ELA is an abbreviation of Emergency Liquidity Assistance, a Eurozone program that allows banks without eligible collateral for ECB loans to obtain loans from their own national central bank (NCB). Collateral deemed ineligible by the ECB may be pledged to the NCB in exchange for a loan instead.
The NCB then rehypothecates the collateral to the ECB in exchange for the funds to disburse to the bank. Under this arrangement, the NCB, not the ECB, is on the hook for the loan to the bank. Since the ECB is ultimately providing the funds, it still retains default risk, no matter what anyone tells you.
The ELA program currently is being used by PIIGS banks to remain solvent. Greece has been a notorious user of the program in order to avoid sovereign defaults during the several crises over its aid package this year.
Greece issues T-Bills, which are purchased by Greek banks. Since these banks are broke, they pledge the bills to the Bank of Greece to fund their purchases. The Bank of Greece then rehypothecates the bills to the ECB to replace the funds it loaned to the banks. To complete the cycle, the funds that the Greek government receives for the issued bills are used to pay government expenses or, in one case, ECB loans.
I’m not making this up. Really.