European Central Bank

By Cecile Vannucci

Greek shares tumbled after their best three- day rally since 1991 as the European Central Bank restricted loans to its financial system.

A defiant Greece said Feb. 5 it would not be ?blackmailed? by its European Union partners but that it did want to find a joint solution to its debt and austerity crisis.

Greece's borrowing rate soared above the symbolic level of 10 percent on Thursday, after the European Central Bank moved to restrict the country's banks' access to a key source of cash.
      
Shortly after 0800 GMT, Greek 10-year bonds were fetching yields of 10.051 percent on the secondary market, up from 9.678 percent on Wednesday.
      

Greek Prime Minister Alexis Tsipras was in contact with European Central Bank chief Mario Draghi late on Wednesday, after the ECB lifted a waiver on Greek government bonds Wednesday evening.

By Lucy Meakin

Greece?s government bonds may decline after the European Central Bank restricted direct access to its funding lines, adding to pressure on the newly-elected government to moderate its anti-austerity policies.

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 European Central Bank's decision on Wednesday to restrict the eligibility of Greek bonds used as collateral raised pressure on the 10-day-old government to yield to German-led austerity calls. The decision was announced at 9.36 p.m. on Wednesday.

The Greek Finance Ministry interpreted a European Central Bank decision to stop accepting Greek government bonds as collateral from local lenders as a moved aimed at pushing Athens and its eurozone partners towards a new debt deal.

By Lorcan Roche Kelly

In a press release that jolted the markets, the ECB announced that it will no longer accept Greek government debt as collateral starting next week. But this news is not necessarily a potential liquidity disaster for Greek banks.

The European Central Bank turned up the pressure on the government on Wednesday by lifting a waiver on Greek government bonds, which means that they can no longer be used by local lenders as collateral to borrow from Frankfurt.