As refinancing operation expires, ECB clamp down on Greece

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The European Central Bank stated it would no longer accept Greek debt (which is “junk rated” by investors that evaluate creditworthiness) as a deposit to finance banks as it was unable to accept a conclusion of Greece’s reform programme to have a positive outcome, as agreed with other international creditors.
The European Central Bank stated it would no longer accept Greek debt (which is ‘junk rated’ by investors that evaluate creditworthiness) as a deposit to finance banks as it was unable to accept a conclusion of Greece’s reform programme to have a positive outcome, as agreed with other international creditors.

From the 11th of February, when the current main refinancing operation terminates, Greek lenders will be forced to look to the country’s national central bank for support in order to satisfy their liquidity needs, which are more costly; the Frankfurt based ECB made in a statement on its website yesterday.

‘The governing council of the ECB today decided to lift the waiver affecting marketable debt instruments issued or fully guaranteed by the Hellenic Republic,’ the statement noted. ‘The waiver allowed these instruments to be used in euros 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 Eurozone rules’.

The ECB said that yesterday’s ‘decision does not bear consequences for the counterparty status of Greek financial institutions in monetary policy operations’.