Economy
The European Central Bank (ECB) raises the liquidity support for Greek banks not. That means that through the Bank of Greece no new money for Greek commercial banks becomes available.
That the ECB has just announced in a statement. The liquidity support to Greek banks is maintained at the level of last June 26: 89 billion euros. The Greek central bank had asked for an increase in the ceiling for the emergency loans. More and more ATMs in Greece are empty
According to our economics editor Mark Beunderman the decision of the ECB to bring Greek banks properly into the problems.
“Technically, the ECB allows this to know that the value of the Greek collateral further went down. The collateral is required to be able to get emergency assistance. With how much it has declined in value, remains to be seen – no figures are mentioned. The Greek debt as collateral consists of Greek government bonds and bank bonds guaranteed by the Greek state. The Greek state is de facto bankrupt, so the guarantees are worthless. For the Greek banks hold so that they get the same amount of collateral less emergency aid. This could bring the Greek banks in big trouble “
Our economics editor Menno Tamminga on Twitter about the recent ECB decision
Greek Central Bank should not give money to banks
The ECB was the Bank of Greece repeatedly to the banks with extra money to prevent them could no longer pay. That is now coming to an end. With the so-called ELA (Emergency Liquidity Assistance) were Greek banks with the national central bank go for money, because if they pledge to return. This operation is the risk of the Bank of Greece, not for the ECB wrote economics editor Maarten Schinkel last week.
“Frankfurt but is ultimately indeed risk if Greece the euro allowed to go out. Therefore, the ECB, the Greek central bank will always give permission to proceed with ELA, and to increment. The decisions on these matters be made based on an assessment of the solvency of Greek banks and the quality of the collateral they give. “
Off collateral is adjusted
The ECB has taken an important decision. The discount on the value of Greek collateral is adjusted. Here’s why:
“The ECB decision on whether to give permission to ELA to proceed is taken based on the solvency of Greek banks ( highly doubtful) and the quality of the collateral they give. This collateral consists of Greek government bonds, whose value obviously decreases. Therefore, the ECB applies a discount on: a so-called haircut.
“Suppose the discount is 48 percent, you get a state loan with a nominal value of 100 as Greek bank only 52 euros in cash from the central bank. However, the amount of the rebate is rarely disclosed. If the Greek state goes toward bankruptcy, which government bonds are worth less, and the haircut to be even bigger “
- Read more about this.
- European Central Bank
- Greece
- debt crises
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