ECB says will take Greek bonds as collateral
The European Central Bank said on Wednesday that it will begin accepting Greek bonds as collateral for central bank loans again, at a discount, a move that will give a boost to eurozone banks still holding the risky instruments.
"Marketable debt instruments issued or fully guaranteed by the Hellenic Republic and fulfilling all other eligibility criteria shall again constitute eligible collateral for the purposes of Eurosystem credit operations, subject to special haircuts," the ECB said in a statement.
The central bank said its based its decision on a positive assessment of Greek reforms by international creditors, which in addition to the ECB itself, include the European Union and International Monetary Fund.
Greece has benefited from several pieces of good news lately, another of which was the upgrading on Tuesday of its sovereign debt by the ratings agency Standard & Poor's to B-/B, which while still a speculative level is no longer a selective default rating.
The ECB decision means that banks which still hold risky Greek bonds can use them to borrow rock-solid funds from the ECB, taking some pressure off the commercial bank's balance sheets.
© 2012 AFP