• Facebook
  • Facebook
  • Facebook
  • Facebook

Search This Blog

Visit our new website.

Tuesday, February 28, 2012

A 'selective' Greek default and some emergency liquidity

A few interesting developments overnight and this morning in the eurozone. Specifically, S&P’s decision to put Greece into ‘selective default’ and the ECB’s reaction.

‘Selective default’ is essentially a partial default rating (in this case validly applied due to the current restructuring which Greece is undergoing and the fact that some bonds held by the ECB have been exempted). Under the ECB’s rules, when a country (and therefore its debt/bonds) is classified in any form of default its bonds cannot be used as collateral for the ECB’s lending operations. The ECB released a statement confirming as much this morning.

The kicker here is that Greek banks are completely reliant on ECB lending for their liquidity needs – they could not survive without it. Unfortunately, a huge majority of the assets which Greek banks use as collateral with the ECB are tied up with the Greek state (Greek government bonds or bonds backed by a Greek state guarantee). The plan to deal with this issue is for the majority of lending to Greek banks which currently takes place under the ECB to move to the Greek Central Bank’s Emergency Liquidity Assistance (ELA) programme. The ELA has lower collateral requirements and therefore will presumably continue to accept the 'defaulted' Greek bonds as collateral.

This is an unprecedented move and should stop Greek banks collapsing. That said the opacity and secrecy of the ELA means it will be even harder to figure out what is going on within the massive sovereign banking loop in Greece.

As a refresher, we present an article we wrote last September on the ELA for the World Commerce Review. It provides a comprehensive run down of how the ELA works and what implications its use could have for eurozone.

To read the article see here.


Anonymous said...

A handbag is such a common item that it is unusual when a lady does not have a handbag or a shoulder bag being toted along. A handbag and a shoulder bag differ in that a shoulder bag has longer straps so that it can be slung over the shoulder. A black handbag does not mean it is only functional it can be very stylish with other color accents or on its own. What clothing should you pack when you must carry all of your luggage yourself and you want to travel light ? Take a "bare" minimum of clothing with you. Dress comfortably and casually. Choose your clothing for its practicality. Ninety percent of Estrella's shoppers are female, which isn't too surprising, and an average tour takes in 10-12 locations, with about 15 minutes in each one. There are pick-ups in Surfers Paradise and Broadbeach. Tours begin at Harbour Town, a paradise of 145 shops where a discount card is given to each participant..
[url=http://mulberryhandbagsoutlev.page.tl/]Mulberry Handbags Sale[/url]
I can't." The fisherman said sadly too, "You're unlucky today, young man. I tell you, if you can't swim, it means you have spent 5/5(all) of your life vainly because you'll die today because of your disability to swim. I can't help you more." Then the raft was finally drowned to the bottom of the deep river.
[url=http://mulberryhandbagsgo.megustaescribir.com/]Mulberry Handbags[/url]
akrgm [url=http://mulberryhandbagsoutleti.blog.cz/]Mulberry Outlet[/url]
A display of punnets of blackberries caught my eye as I was passing the excellent greengrocer so I bought a couple with the vague idea of turning them into a pie with a couple of apples that were hanging about in the fruit bowl. My dad used to bake the most delicious fruit pies, the pastry always so short and buttery and just the right amount of filling. I don think this one was up to his standard but it struck me that it was a fitting pudding to serve on the day which marked four years since he passed away.. Do not limit your savings to food: Think of the money that we spend on watching a movie. Seeing a movie in a theater will cost a couple and three children between $30-$45 just for admission. Renting a movie to watch at home will cost less than you would pay for popcorn at the theater.

Unknown said...

Useful and informative content for the blog owners who are trying their fortune to become popular in Search engines...However thanks for the discuss. Adult Toys