Exclusive: Bundesbank chief warns peers over funding for Greek banks - source

FRANKFURT (Reuters) - The head of the Bundesbank expressed serious concern about providing continued emergency funding to Greek banks in talks with his peers this week, a person familiar with the discussion said, as opposition grows to granting Athens a lifeline.

Jens Weidmann has warned against the use of such emergency credit to prop up Greece's banks ever since those lenders started to rely on it in February, but his latest protest is significant because of its timing.

"He has made his concerns clear from the start," said the person, adding that Weidmann raised the issue this week in a telephone call among euro zone central bank chiefs and the European Central Bank's executive.

This latest intervention, as Greece edges dangerously close to default, marks a more concerted effort to curtail the funding, the source said.

Earlier this week, politicians in Ireland and Germany also voiced similar concerns.

The objections of Germany's central bank, respected as a guardian of monetary order in the euro zone's biggest economy, are significant although it alone cannot stop the Emergency Liquidity Assistance (ELA) being extended to Greece's banking sector, which is now approaching 90 billion euros ($101 billion).

Greece's ruling Syriza party has dismissed reform demands from the country's international creditors as "blackmail", just as crisis talks to avert a debt default and a euro zone exit entered a critical phase.

As president of the Bundesbank, Weidmann also sits on the ECB's Governing Council, which holds daily phone calls to discuss the extension of the ELA funding to Greek banks. This group can restrict such funding if a two-thirds majority agrees.

Others too have concerns about the funding lifeline although more recently no one had been willing to speak out, not wanting to be accused of triggering Greece's financial collapse, one person who attends the meetings of central bank chiefs recently told Reuters.

This could now change. Some countries typically fall in behind the Bundesbank, which is a respected institution among the group of 19 euro zone countries.

Ralph Brinkhaus, deputy parliamentary floor leader for German Chancellor Angela Merkel's conservatives, had said that the funding was keeping Greece "artificially ... above water".

(Reporting By John O'Donnell; editing by John Stonestreet)