Situation for lenders difficult, says Trichet

A man walks past an exchange rates board outside a bank in central Athens yesterday. On the domestic banking front, European Central Bank (ECB) President Jean-Claude Trichet said that the situation for Greek lenders remains difficult and could deteriorate further, Reuters reported. Trichet said the Greek banking system was using the liquidity provided by the ECB and national central banks, while the recent changes to rules on accepting assets as security in exchange for loans removed the risk banks would no longer be able to use government bonds as collateral. Fortunately for Greece, the ECB will keep accepting BBB-rated debt next year and will exempt government bonds from new risk penalties on lower-rated assets.