Tuesday

9th Aug 2022

ECB ratchets up pressure on Greece

  • Draghi shows little mercy on Greece (Photo: ec.europa.eu)

In a surprise move, the European Central Bank on Wednesday night (4 February) said it will no longer accept Greek bonds as collateral for loans, giving Athens a week to reach an agreement with international creditors or face serious cashflow problems.

Under the eurozone bank's rules, junk-rated bonds cannot be accepted as collateral. But Greek banks were nevertheless able to access cheap ECB loans under an exemption linked to the troika-overseen bailout programme.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

This waiver will be annulled from 11 February onwards because the ECB does not think Greece will reach a deal with its creditors by the end of the month, when an extension of the bailout expires.

“Suspension is in line with existing Eurosystem rules, since it is currently not possible to assume a successful conclusion of the programme review," the ECB said in a statement.

The ECB board however kept the "emergency liquidity assistance" (ELA) programme for Greek banks - which is routed through the Greek central bank and at higher interest rates than the direct lending from the ECB.

But the Frankfurt bank reviews the ELA system every two weeks to decide whether to continue it, giving the ECB further leverage over Greece.

The ECB's decision came after the new Greek finance minister, Yanis Varoufakis, met with ECB chief Mario Draghi and said he had "fruitful" talks with the Italian central banker.

Varoufakis on Thursday is expected in Berlin for talks with his German counterpart, Wolfgang Schaeuble, who insists that the only way out of the conundrum is to stick to the reforms already implemented, rather than annulling privatisations and rolling back labour law reforms as the new Greek government has pledged to do.

Greek stocks and the euro fell after the ECB statement, erasing gains made in the previous hours and days when positive signals from Rome, Paris and Brussels indicated there might be a deal in sight soon.

The ECB was not expected to act before the end of the month, when the bailout extension expires. The previous Greek government, unable to agree with the creditors before elections, obtained the two-month extension in December.

Greece flip-flops on troika talks

Greek finance minister Yanis Varoufakis has denied previous statements that Greece will no longer deal with the troika of international creditors following icy talks with the head of the Eurogroup.

Germany to Greece: We agree to disagree

A tense meeting between the Greek and German finance ministers ended with no prospect of a swift deal on Greek debt or an extension of the current bailout program.

Column

Albania's post-communist dream has lessons for Ukraine

Comparisons between post-communist Albania and current-day Ukraine are fascinating — and make many pertinent parallels. Ukrainians have a similar determination to belong to "the rest of Europe" as Albanians.

Opinion

Finally, the victims of Utøya got a memorial

A legal battle between locals on the one hand and the state and the labour youth organisation on the other side postponed the inception of the memorial in remembrance of the victims of Anders Behring Breivik.

News in Brief

  1. Rhine river on the brink of closure for shipping
  2. Moldova sees 'prelude to war' with Russia-backed forces
  3. Taliban preventing Afghan evacuations to Germany
  4. Amnesty regrets 'distress' caused by Ukraine report
  5. Energy companies warn UK gas exports to EU are contaminated
  6. EU set for clash over rules on political adverts
  7. Three grain ships due to leave Ukraine on Friday
  8. EU on track to reach gas-storage November target

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Latest News

  1. Italy poised to elect far-right rulers
  2. UN chief demands access to nuclear plant after new attack
  3. Greek PM embroiled in spyware scandal
  4. How Ukraine made the case anew for an EU army
  5. 'We must take back institutions', Orban tells US conservatives
  6. Putin must lose Ukraine war, Nato chief says
  7. Let Taiwan's democracy shine brighter
  8. Droughts prompt calls to cut water use amid harvest fears

Join EUobserver

Support quality EU news

Join us