Greek Bonds No Longer Good as Collateral — ECB

24/7 Wall St.

The European Central Bank (ECB) said this morning that Greek debt, whether issued or backed by the government, is “for the time being” no longer eligible to be used as collateral in eurozone monetary policy operations. The ban takes effect on July 25, when the current buyback program ends. Had Greek sovereign debt been used as collateral beyond that date, the ECB would have been on the hook for losses.

The announcement sent the euro plunging to 1.2144, its lowest point in the past two years versus the U.S. dollar. Compounding the drop in valuation was a request from Spain’s Valencia region for help from Spain’s central government to help Valencia repay outstanding debt. Earlier today, eurozone finance ministers approved a €100 billion bailout package to recapitalize Spanish banks.

The ECB will review Greece’s eligibility to use its debt as collateral in conjunction with the European Commission and the…

View original post 95 more words