The central bank changes its Greek banks refinancing rules Tsipras to force the government to negotiate a new program with the euro area. The Greek Ministry of Finance has tempered the scope of the decision of the monetary institution in Frankfurt.
Dramatic turn of events in Frankfurt. The Governing Council of the ECB, which met yesterday in Frankfurt, finally decided not to accept the titles of the Greek State as collateral for its main refinancing operations. “This decision was made because it is not possible today to consider a satisfactory conclusion of negotiations,” said the ECB in a statement.
The Greek Ministry of Finance has tempered the scope of the decision of the monetary institution in Frankfurt, making soon after she had “no adverse impact” on the country’s financial sector remains “fully protected” through other channels still available cash. The decision of the ECB, said the ministry in a statement, “puts pressure on the Eurogroup (meeting of euro zone finance ministers, ed) to quickly move towards the conclusion between Greece and its partners in a agreement that benefits everyone “on the future of the Greek debt and the country’s economic reforms.
Nevertheless, it is a blow to Greek banks and the Greek State, which issues securities purchased by Greek banks and accepted as collateral by the ECB in exchange for cash. Greek banks can no longer rely on an emergency credit line offered by the Bank of Greece to its banks, with the prior approval of the ECB. The hotline was renewed yesterday. It will be reviewed in two weeks.
The ECB has chosen the path of firmness to require Greece to resume negotiations with its European creditors. This surprise decision broke the momentum of Wall Street (+ 0.04% at closing) and set back the euro by 1% against the dollar.
This is Mario Draghi himself received the Greek Minister Yanis Varoufakis in Frankfurt. The President of the ECB was assisted by Benoît Cœuré board member in charge of international affairs, and the chief economist of the bank, Peter Praet. Their message was clear: Greece will not have the support of the ECB, provided that the Government of Alexis Tsipras “promptly and constructively negotiate” with the Eurogroup – the finance ministers of the euro area – to ensure “financial stability” of Greece.
In his showdown with the ECB, Greece is in a weak position. “I am the minister of a failed state, recognized Varoufakis in an interview with the German weekly Die Zeit . The ECB should support our banks so that we can keep our heads above water. “For an hour maintenance, leaders of the ECB patiently explained to the Greek Minister of Finance the rules of their institution. Greece, which relied on an extension of the ECB’s € 10 billion to “hold for three months” and repay its debt maturities, could only have been disappointed by the facts.
The Board of Governors, which held its regular meeting after this meeting, was even more severe. He certainly renewed the emergency credit line to help the three largest banks in the country to meet their deposits leaks. But he also suspended the emergency regime in place to date for Greece, which enabled him to provide the ECB’s government debt yet rated “junk” by the rating agencies. This decision will complicate the financing of Greece and force the country to resume as soon as discussions with its eurozone partners. Otherwise, the default that threat.
“Greece has a rapid financing need, higher than expected,” says Jacques Cailloux, an economist at Nomura Bank in London. Thus. That’s the rule. If Greece does not bend them, banks will be deprived of cash on 28 February and the Greek state will be at the edge of default. As in 2010 …
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