Saturday, March 31, 2012

Bundesbank to refuse bailout recipients' sovereign bonds as collateral from May.

Ekathimerini carries the report linked here. This is not however merely an extremely serious matter for Greece, for it also starting from next May will restrict the activities of many banks previously using Portuguese and Irish sovereign bonds as collateral.

As the Greek newspaper points out in the following quotes the end game finally seems to have now arrived for Greece, as even its new issue bonds following the "voluntary" haircut will now seen to be as worthless as those they replace:

Up until this week Greek bonds had been used by banks to draw liquidity from eurozone central banks and the European Central Bank. However, the ECB announced on March 21 that it was giving eurozone member states’ national central banks the right to reject bonds of banks guaranteed by states that are in European Union and International Monetary Fund reform programs: Greece, Portugal and Ireland, for the time being.
In this context, the Bundesbank has become the first of the eurozone’s 17 central banks to refuse these countries’ bonds as collateral, according to a report in Friday’s Frankfurter Allgemeine Zeitung. This means that as of May, the German central bank will cease to lend to commercial banks that use Greek, Irish or Portuguese bonds as collateral.

The report came to my notice via The Slog, John Ward's views may be read from here.

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2 Comments:

Anonymous www.resumesplanet.com said...

Activities of many banks previously using Portuguese and Irish sovereign bonds as collateral.

3:26 AM  
Blogger monu yogi said...

This is not however merely an extremely serious matter for Greece, for it also starting from next May will restrict the activities of many banks previously using Portuguese and Irish sovereign bonds as collateral. ivory research forum

9:13 AM  

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