ECONOMY

Bundesbank says no ban on sovereign debt collateral

Germany’s Bundesbank said on Monday that it will continue to accept all eurozone sovereign bonds as collateral in its lending operations, rejecting media reports that it had stopped taking debt from EU/IMF programme countries.

Stock markets turned negative on Monday and traders pointed to media reports which said that the Bundesbank had stopped accepting sovereign bonds from Portugal, Ireland and Greece.

“We continue to accept sovereign debt from these countries under the ECB’s rules,» a Bundesbank spokesman said.

Last month, the ECB gave the euro zone’s 17 national central banks the power to ban the use of bank bonds underwritten by governments in EU/IMF bailout programmes as collateral to get unlimited ultra-cheap loans.

The Bundesbank was the first to say it would use the power.

[Reuters]