European Central Bank Tightens Noose on Banking System as Creditor Powers Punish Greece

(Before It's News)

Greek ‘No’ vote sees lenders act in concert, warning of imminent bankruptcy unless Athens capitulates to fresh reform demands

by Ambrose Evans-Pritchard, Athens & Mehreen Khan
Telegraph.co.uk

The European Central Bank has tightened liquidity conditions for the Greek banking system following the landslide victory for the Leftist government in Sunday’s referendum.

The central bank continued its freeze on the emergency liquidity assistance (ELA) it provides the banking system at €89bn. But in a highly contentious move, opted to tighten the collateral rules it imposes on lenders to access the lifeline, intensifying the squeeze on the cash-starved banks, which are set to remain closed for another two days.

The ECB said the move was based on the deteriorating quality of the bank collateral, most of which is made up of Greek government bonds. “The Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA,” it said.

Continue Reading at Telegraph.co.uk…

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