Thursday, 30 April 2015

Debate on Greek bank collateral not yet on ECB agenda – Hansson

In World Economy News 30/04/2015

European Central Bank policymakers have yet to formally discuss any plans to make Greece pay more for the emergency funding that is keeping its banking system afloat, Governing Council member Ardo Hansson said.
Greek banks have been drawing emergency liquidity assistance (ELA) from the country’s central bank, a funding lifeline provided in exchange for collateral. The ECB has been raising the cap on the funds weekly, most recently on Wednesday by 76.9 billion (£55 billion) euros, a banking source told Reuters.
European authorities are growing increasingly concerned about Greece’s ability to meet its financial obligations as a standoff over economic reforms between the government and its international lenders drags on.
Hansson said the issue of haircuts – the size of the discount applied to the nominal value of the ELA collateral – was being examined at a technical level within the ECB.
“I think other colleagues (on the Governing Council) have said that at one point it will come to the table as well, but an exact date I can’t say right now,” Hansson told a news conference.
The ECB declined to comment last week on a media report saying staff at the central bank had prepared a proposal to increase the haircut on the collateral.
Hansson, who is also Estonian central bank governor, added there was no reason to consider the idea of Greece defaulting on its debt.
“All sides have said that they don’t see …(a Greek default) as a desired outcome,” he said.
“The discussions have been difficult and frustratingly slow, but still nobody has indicated that they are pursuing any other plan (than reaching a funding agreement).”
Greek authorities had said they intended to respect their debt obligations, “so I see no reasons to speculate on other scenarios.”

Source: Reuters (Reporting by David Mardiste; Editing by John Stonestreet and Larry King)