ECB blast: No Greek bonds accepted henceforth
Euro declines – Spreads soar sky high – Frankfurt appreciates that following the current situation is not possible to successfully complete the evaluation – The decision will come into effect from February 11
Late Wednesday ECB made a sudden decision and announced that from February 11 will not accept any Greek bonds for collateral.
The financing of the Greek banks through collateral will continue as normal, but through the ELA mechanism, namely the Bank of Greece, with ECB’s approval.
Frankfurt appreciates that following the current situation is not possible to successfully complete the evaluation.
The decision will come into effect from February 11.
At the same time Euro starts to decline and spreads soar sky high.
More specifically from February 11, the ECB will won’t accept any Greek bonds or any kind of bonds issued by the Greek State or guaranteed by the Greek government.
The above decision was originally meant to be put into force on March 1, which is after the end of the two month extension of the existing memorandum.
The sudden decision of the ECB is a resounding message of Frankfurt to the Greek government to submit now its proposals, in order to discuss and agree on a financial aid program.
According to the official ECB announcement “the suspending of accepting Greek bonds is consistent with the rules of the Eurosystem, since at this point it is not possible to assume that there will be a successful completion and review of the program.”
However, as the CNBC reports the decision is expected to put more pressure on the new Greek government to come to a deal on the country’s bailout program.
“This news will likely scare depositors and result in further bank runs. This all said, if Greece can come to an agreement with the troika, I’m sure the ECB will reinstate the waiver,” Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a note after the announcement, according to CNBC.
According to CNBC, The ECB’s move is “not as big a deal as it seems,” TrendMacro CIO Donald Luskin wrote in a note, especially in light of Wednesday morning’s announcement that the ECB had authorized Greece’s central bank to use “Emergency Liquidity Assistance” for Greek banks as needed.
The report continues by stating that “If you put both of today’s policy moves together, what it means is that the Greek government and not the Eurosystem, will be on the hook for the collateral. But there will still be a funding mechanism for the banks, in case there is a serious run on them. That’s the important thing,” Luskin wrote, according to the CNBC.
Finally, the report notes that Global X Funds’ Greek ETF fell more than 10 percent on the news.
The financing of the Greek banks through collateral will continue as normal, but through the ELA mechanism, namely the Bank of Greece, with ECB’s approval.
Frankfurt appreciates that following the current situation is not possible to successfully complete the evaluation.
The decision will come into effect from February 11.
At the same time Euro starts to decline and spreads soar sky high.
More specifically from February 11, the ECB will won’t accept any Greek bonds or any kind of bonds issued by the Greek State or guaranteed by the Greek government.
The above decision was originally meant to be put into force on March 1, which is after the end of the two month extension of the existing memorandum.
The sudden decision of the ECB is a resounding message of Frankfurt to the Greek government to submit now its proposals, in order to discuss and agree on a financial aid program.
According to the official ECB announcement “the suspending of accepting Greek bonds is consistent with the rules of the Eurosystem, since at this point it is not possible to assume that there will be a successful completion and review of the program.”
However, as the CNBC reports the decision is expected to put more pressure on the new Greek government to come to a deal on the country’s bailout program.
“This news will likely scare depositors and result in further bank runs. This all said, if Greece can come to an agreement with the troika, I’m sure the ECB will reinstate the waiver,” Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a note after the announcement, according to CNBC.
According to CNBC, The ECB’s move is “not as big a deal as it seems,” TrendMacro CIO Donald Luskin wrote in a note, especially in light of Wednesday morning’s announcement that the ECB had authorized Greece’s central bank to use “Emergency Liquidity Assistance” for Greek banks as needed.
The report continues by stating that “If you put both of today’s policy moves together, what it means is that the Greek government and not the Eurosystem, will be on the hook for the collateral. But there will still be a funding mechanism for the banks, in case there is a serious run on them. That’s the important thing,” Luskin wrote, according to the CNBC.
Finally, the report notes that Global X Funds’ Greek ETF fell more than 10 percent on the news.