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Beware Of Greeks Bearing Collateral

The main story today is not that the ECB will no longer (as of February 11) accept Greek government bonds as collateral and that Greek banks can have access to the national central bank via the Emergency Lending Assistance. That news broke late in North America yesterday. The euro fell around a cent on the news. The real development today is that the impact remains largely confined to Greece. As this became clear, and that the ECB would lift the ELA borrowing cap by 10 bln euros, the single currency recovered in the European morning. It is above levels that were prevailing when the news initially broke.

Following the election results, Syriza came out swinging. It first pressed for debt forgiveness and then offered a sketch of a bond swap scheme. The IMF, EU and Germany did not like it. The ECB was the bludgeon. This was not a technocrat… Read More …