Open Europe Blog

ECB piles pressure on Tsipras by restricting liquidity access for Greek banks

Earlier than expected, the ECB announced yesterday that it would no longer accept Greek bonds as collateral from Greek banks in return for liquidity as of next Wednesday. Greek banks will still be allowed to get emergency funding from the Greek Central Bank, via the so-called Emergency Liquidity Assistance (ELA) facility. However, the ECB can veto the use of ELA with a two-thirds majority in the Governing Council. The ECB is due to carry out the next review of the ELA facility on 18 February. The ECB’s move increases pressure on the new Greek government to strike a deal with its creditors before the 28 February – when Greece’s bailout programme expires. The Greek Finance Ministry said in a statement that the ECB “is putting pressure on the Eurogroup [of Eurozone finance ministers] to move quickly to seal a new mutually beneficial deal between Greece and its partners.”

Meanwhile, Greek Finance Minister Yanis Varoufakis will today hold talks with his German counterpart Wolfgang Schäuble in Berlin. According to a leaked document seen by Reuters, the German government rejects any proposal from the new Greek government to “roll back” on the reform agenda agreed by its predecessor. The Guardian Live Blog cites Open Europe’s blog post arguing that SYRIZA appears to have blinked first in the negotiations by dropping its demands for a debt write-down.

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