ECB plan for more col­lat­eral to lo­cal banks

Kathimerini English - - Front Page - YIAN­NIS PAPADOYIANNIS

The Euro­pean Cen­tral Bank is work­ing on a plan to pro­vide an im­me­di­ate boost of liq­uid­ity to the lo­cal credit sys­tem once ne­go­ti­a­tions be­tween the gov­ern­ment and Greece’s cred­i­tors are com­pleted and a new bailout agree­ment is signed.

The plan pro­vides for the Euro­pean Sta­bil­ity Mech­a­nism (ESM) to is­sue spe­cial col­lat­eral for do­mes­tic lenders with which the ECB will re­store the flow of the ba­sic form of fund­ing to Greek banks by the Eurosys­tem. This col­lat­eral, amount­ing to 10 bil­lion eu­ros, will be granted via a spe­cial ac­count pro­vided that a new bailout agree­ment is passed.

The ESM col­lat­eral will be ex­clu­sively re­served for the ECB, which will then be able to re­place the costly (for Greek lenders) flow of cash through the emer­gency liq­uid­ity as­sis­tance (ELA) mech­a­nism with reg­u­lar fi­nanc­ing. ELA comes at a cost of 1.55 per­cent, while ECB fund­ing has an in­ter­est rate of just 0.05 per­cent. There­fore, such a move would help banks re­turn to nor­mal and pave the way for the sub­stan­tial eas­ing of cap­i­tal con­trols, credit sec­tor of­fi­cials es­ti­mate.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.