Union International: The European Central Bank will no longer accept Greek bonds as collateral for loans, raising the pressure on Greece’s banks.
Union International: The European Central Bank has said it will no longer accept Greek government bonds as collateral for loans. The central bank said its decision was based on legitimate concerns that the country might not be able to successfully conclude its bailout talks with its lenders.
Skeptics, however, said the move was tantamount to a shot across the bows of the new Greek government led by Alexis Tsipras warning that the country should adhere to the terms of its €240 billion bailout.
“The Greek banks are already under considerable pressure as it is,” said Solomon Roth, chief economist at Union International. “Greeks, businesses and individuals, are withdrawing billions of euros every week as the prospect of a Greek exit from the euro zone and, by extension, the euro currency grows.”
The Osaka, Japan-based investment house says Greece could end up being treated in much the same way as Cyprus was when it was bailed out by the troika. “How long will it be before controls are placed on the amount of money Greeks can withdraw from ATMs each day? How will Greeks react if their savings are made the subject of a “haircut” like Cypriots’ savings were before the troika would agree to a bailout of the tiny nation’s huge banking system?”, asked Roth.
Prime Minister Tsipras’s efforts to gather support for a restructuring of his country’s debt burden have met a cool reception but he has pressed on with the implementation of campaign promises regardless. His government has frozen future and reversed some past public sector lay-offs and has scrapped the planned privatization of a 67% stake in the port of Piraeus.
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