Thursday May 28, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Bundesbank rejects Greek bonds

 German central bank refuses debt from countries in bailout programs as collateral for liquidity

By Sotiris Nikas

Greek bonds are increasingly becoming worthless, which may well further delay Greece’s return to the markets, as Germany’s central bank is now refusing to accept the bonds of countries in bailout programs as collateral, according to a press report in Germany.

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 German daily adds that the Bundesbank has just under 500 million euros invested in Greek, Irish and Portuguese bonds.

The development is very serious as it means that even the new bonds issued by Athens to replace the old ones after the private sector involvement in the haircut will have too low a value. Already their difference in yield compared to German bunds, known as spread, has grown by more than 200 basis points in fewer than 20 days, climbing to 1,940 bps.

Consequently the Greek bond market, and therefore the country’s economy, will remain under great pressure, the negative climate will be even harder to reverse, and Greece’s return to the market will be further delayed. It also means that the credibility of the new bonds issued is no different to that of the old ones they have replaced.

What is more, Greek banks will need to gradually seek funding from other sources and not the Eurosystem, which is not at all an easy proposition.

ekathimerini.com , Friday March 30, 2012 (23:01)  
ECB working on the assumption that Greece won´t leave euro, says Constancio
Greek bank losses show predicament amid record outflows
ECB says contagion risk exists If Greek deal not reached quickly
Lagarde says still much work to do in Greek debt talks
To Potami pledges to back loan
Greece's fourth-largest party, pro-EU To Potami, on Thursday pledged to back a new deal between the country and its creditors that could face a rocky ride through parliament. "Whichever agre...
Migrants turn Greek island into ´hellhole´ for holidaymakers says British daily
Migrants fleeing Syria and Afghanistan have turned the Aegean Island of Kos into a “disgusting hellhole,” according to Britain’s Daily Mail online edition. Known for cheap package deals, Kos...
Inside News
SOCCER
Panathinaikos conquers PAOK through Tavlaridis goal
A Stathis Tavlaridis goal has brought Panathinaikos to practically within one point from clinching a spot in next season’s Champions League qualifiers, as the Greens made it three out of thr...
SOCCER
AEK Athens returns to top league after financial collapse
Greek club AEK Athens has just returned to the country's top soccer league, two years after financial collapse sent it to a lower league. One of the country's largest clubs, AEK sealed its s...
Inside Sports
COMMENTARY
Endless confusion and worry
The Holy See on Wednesday expressed its own view regarding the Greek crisis. Cardinal Pietro Parolin – the Vatican’s equivalent of prime minister – voiced his concern over ongoing negotiatio...
EDITORIAL
Following up on a positive step
The latest European initiatives aimed at addressing the rising number of asylum seekers and irregular migrants reaching the shores of Greece and other Mediterranean countries are important. ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. To Potami pledges to back loan
2. ECB working on the assumption that Greece won´t leave euro, says Constancio
3. Greek bank losses show predicament amid record outflows
4. ECB says contagion risk exists If Greek deal not reached quickly
5. Migrants turn Greek island into ´hellhole´ for holidaymakers says British daily
6. Lagarde says still much work to do in Greek debt talks
more news
Today
This Week
1. Endless confusion and worry
2. ECB's Nowotny says no to loosening funding for Greece now
3. G-7 weighs in on Greece as Tsipras government told to be serious
4. Lagarde says still much work to do in Greek debt talks
5. Following up on a positive step
6. European shares edge lower as Greek deal optimism fades
Today
This Week
1. Conspiracy madness
2. Hotel contracts with a ‘Greek default clause’
3. Neither Grexit nor a dual currency will solve Greece’s problems
4. No more 'quick and dirty' fixes for Greece
5. Some 300 mln left banks on Tuesday
6. Merkel said to plan address for Greece if deal reached
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.