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ECB to stop accepting Greek bonds as collateral for granting liquidity

This is pure and blatant blackmail and came without a warning! The European Central Bank decided to stop accepting Greek bonds as collateral for granting liquidity as of February 11th 2016. Greek banks can still receive emergency funding from Greek Central Bank via Emergency Liquidity Assistance, a statement said.

ECB justified its decision saying

“Suspension is in line with existing Eurosystem rules, since it is currently not possible to assume a successful conclusion of the programme review” [with the Troika].

ECB issued a press release announcing its decision on Wednesday evening, the same fay Greke Finance Minister Yanis Varoufakis had a meeting with ECB head Mario Draghi..

February 2015 – Eligibility of Greek bonds used as collateral in Eurosystem monetary policy operations

  • ECB’s Governing Council lifts current waiver of minimum credit rating requirements for marketable instruments issued or guaranteed by the Hellenic Republic
  • Suspension is in line with existing Eurosystem rules, since it is currently not possible to assume a successful conclusion of the programme review
  • Suspension has no impact on counterparty status of Greek financial institutions
  • Liquidity needs of affected Eurosystem counterparties can be satisfied by the relevant national central bank, in line with Eurosystem rules

The Governing Council of the European Central Bank (ECB) today decided to lift the waiver affecting marketable debt instruments issued or fully guaranteed by the Hellenic Republic. The waiver allowed these instruments to be used in Eurosystem monetary policy operations despite the fact that they did not fulfil minimum credit rating requirements. The Governing Council decision is based on the fact that it is currently not possible to assume a successful conclusion of the programme review and is in line with existing Eurosystem rules.

This decision does not bear consequences for the counterparty status of Greek financial institutions in monetary policy operations. Liquidity needs of Eurosystem counterparties, for counterparties that do not have sufficient alternative collateral, can be satisfied by the relevant national central bank, by means of emergency liquidity assistance (ELA) within the existing Eurosystem rules.

The instruments in question will cease to be eligible as collateral as of the maturity of the current main refinancing operation (11 February 2015). (via ECB official website)

If THAT is not a political decision pushed by Merkel and Schaeuble to blackmail the new Greek government then I don’t know what it is…

PS #shoo or #sue the ECB for deliberately engineering a bank run?


Some reactions from Twitter

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  1. Why blackmail ? This is normality. Why treat Tsipras better than Samaras ? Samaras at least tried to improve the situation, sometimes he succeeded, sometimes not. At least ECB and Germany do not blink, and I think , it is very good. Let Tsipras print the drachma – for drachma , he needs no liquidity and no ECB.

  2. PS. It is high time to be independent – with drachma. Why is independence a blackmail ?

  3. Surprised? The ECB made “the offer you can’t refuse” to Ireland: bail-out your banks, or else…

    Now we can listen to the news from Iceland having similiar problems: banking sector was in ruins, the country was in bankcrupt etc.

    News is that Icelandic unemployment is at 4 pc, but according to government, they will try to push it down to 2 pc. Country is recovering, etc. Iceland is about to withdraw its application to the EU altogether.

    We all did this to Greek (and Spaniards, Portuguese, Irelandmen etc) people because they wanted to keep hands on euro, the common currency.

    What else Greek are willing to sacrifice for German euro? Wives and children?

  4. Yes , Iceland had a similar problem, but there is a difference : in Iceland banks were bankrupt, and Greece is a bankrupt state, promising new gifts to the people that it cannot finance. The banks will be maybe bankrupt, too, but it is totally another story. I do not know why Iceland is always quoted – bankruptcy of banks is not the same as bankruptcy of the country.

  5. But it is good that ECB stopped this dance. Now Tsipras has less time and probably has a sovereign choice : to blink and come back to Samaras’ program or to get out from euro. This is democracy – freedom must be connected with responsibility. When Greece has drachma, it can do whatever it wants – give old age pensioners not only 13th , but also 18th pension, put up minimum wage to one billion drachmas or even gazillion drachmas.
    What I appreciate is : the game of chicken is shortened, it will finish maybe in February. The more interesting it is…

    • Peter, greeks don’t want a gazillion drachmas, only money to pay their electricity bills and put food on table. I wonder: what drives a person to sit at a computer and spend that energy to insult an entire country? Don’t you have nothing more useful to do? How dare you to speak about old age pensioners you don’t know nothing about? Who are you?

  6. I never wanted to insult the country. I feel much sympathy to Greece. I also think that austerity failed. I think that 60 % unemployment of young people is not possible to survive.
    But I think it is a wrong way to make a game of chicken, who will blink the first. Exactly because it is not good for your country.
    Also anybody with some economic knowledge knows that if unemployment among young people is 60% with a minimum salary of 580 euro, it will be higher with a minimum salary of 780 euro – because of competition from other countries.
    I do not like government making too many promises that cannot be fulfilled – and this is the problem.

    • keeptalkinggreece

      what’s your problem? you;re not even a voter here lol
      and you got your info wrong: youth minimum salary is 480 euro gross, in real life 200-300 euro. the minimum wage is to raise from 580 now to 751.

      • I am just saying : it would probably bring even more unemployment. That is all. Quoting wiki : “In contrast, opponents of the minimum wage say it increases poverty, increases unemployment (particularly among unskilled or inexperienced workers) and is damaging to businesses”.
        Of course, if unemployment were 5 or 10 %, minimum salary can go up. But it is very risky in such a situation like now. You must find – except in a case of government officials – a businessman to pay this money to an employee. And let us agree : Greek businesses are also heavily hit by the crisis. How can they afford it ?
        And of course, I do not know all the numbers exactly.

        • keeptalkinggreece

          all this is a technocratic, arithmetic and theoretical crap. Fact is that investments are needed, tax incentives for companies, less bureaucracy to start and maintain a business, and salaries that allow people to live a descent live.

          • No , it is not a crap. Much of this is not well evidenced and there can be mistakes – like austerity. But it is not a crap.
            And I agree 100 % with your list of what is needed. But nobody will come to invest into a country playing chicken or into a country with a danger of a bank run. Investors love peace and safety. Greek employers also love peace and safety.
            So : of course, we agree on what is needed. We may disagree at the means / details to achieve it. But like Germans say, the devil is in details.

  7. PS. And also yes, true, if there is a game of chicken which is amazing, I spend too much time looking at news from Greece. The future of Europe can be at stake.
    And believe me , Pedro, I really like your country. And euro is a part of your country’s problem. Maybe getting out from euro is a way out, I do not know. Maybe continuing austerity is a way out, too – there were many symptoms of improvement.
    The problem is – there is probably no good and quick solution. And I repeat : I do not like promises that cannot be fulfilled. I am not offending the country, I just mock at the promises.

    • You already said you are in love for my country. Thank you. But… does “Pedro” really sounds like a greek name, to you? Think again… I’m portuguese. But Portugal is For Lovers, too, as some t-shirts say 😉 It just happens that I have to listen the “gazzilion” speach every day, and that minimum wage crap. What’s the evidence for that? Someone said? That’s it? So, I’m sorry, but I’m mad. But I love you.

  8. Keeptalkinggreece, of course I am not a voter. I am just commenting. You are entitled not to like my comments and even to remove them as the moderator. But Mr Draghi or Schauble also are no voters.
    The situation in Greece has influence on Europe and vice versa. This exactly makes the situation very interesting.
    Honestly : I think that it would be better that Mr Tsipras accepts prolongation of Samaras’ package and negotiates strongly afterwards, when Greece has more time. Of course, austerity should be diminished – but game of chicken is too risky. If it fails, Greece will be the main victim, not Germany. But maybe I am wrong and Mrs Merkel will blink – we will see.

  9. The future of Europe can be at stake?

    I never wanted this kind of Europe, and I have not chosen for this Euro crap, and I have not chosen for the pad to a ridicules political/military/tax union.
    I don’t care about the EU, because we don’t need it.
    let Greece stay as Greece and France as France and the Germans as Germans.
    Back to the EEC and old currency.