ECB Lifts Waiver on Greek Govt Debt as Collateral

The European Central Bank (ECB) announced that it would would no longer accept junk-rated Greek government bonds as collateral for regular central bank loans.

The ECB said in a Wednesday statement that it its Governing Council had decided to lift the waiver affecting marketable debt instruments issued or fully guaranteed by Greece.

The ECB made clear that the waiver had made it possible for 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," the ECB declared.

The Frankfurt-based central bank assured that the decision would not affect 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 ECB noted, adding that the decision would come into effect on February 11, 2015.

The move is seen as a major blow to the newly-elected Syriza-led government to renegotiate the terms of the EUR 240 B bailout.

The measure will make access to cash more expensive for Greece's banks, according to reports of the BBC News.