Since the early days of the financial crisis the ECB has been very aggressive in accepting collateral that would make most central banks turn up their noses. The FT Deutschland reported this morning that the dodgy collateral had saddled the ECB with billions in losses though the Bank denied the charges this morning.
EUR/USD is off its lows but questions will linger as the market knows the ECB holds many securities that could easily be considered “sub-prime”. We trade now at 1.2662.
