ECB lifts waiver on Greek government debt as collateral. Emergency Liquidity Assistance (ELA) still in place.

The ECB adds:

  • It cannot assume successful conclusion of Greece review.
  • ECB decision does not affect counterparty status of Greek banks
  • Waiver decision applies as of Feb 11
  • Bank liquidity needs can be met by Greek Central bank

So if not accepting the Greek bonds as collateral for loans, then other collateral needs to be applied. That might be a problem if not available. Greek banks own a lot of Greek debt.

The EURUSD initially moved up a few pips. Not sure that is the right reaction.

In the last few minutes, we are now seeing a move back to the downside in the EURUSD. The next target is being tested against the 50% retracement at the 1.1388 level. The 1.1372 is the low from November 2003. The 100 hour MA is at 1.1364. A move below that, and the 200 hour MA and trend line at the 1.1325 level become the next levels to target. All are in play potentially. Be aware.

NOTE: On the ECB website it says:

This decision does not bear consequences for the counterparty status of Greek financial institutions in monetary policy operations. Liquidity needs of Eurosystem counterparties, for counterparties that do not have sufficient alternative collateral, can be satisfied by the relevant national central bank, by means of emergency liquidity assistance (ELA) within the existing Eurosystem rules.

It seems that the banks will not be left out if they do not have enough collateral as they have acccess through the emergency liquidity assistance.

Nevertheless, the headlines have hurt the stocks, the EURUSD is down, there has been some US bond buying. I would expect that if the Greek waiver is no longer available, it might also reduce the demand for their debt, raising yields.

The link to the Press Release can be found here.

EURUSD comes off after comments from ECB

EURUSD comes off after comments from ECB