The European Central Bank announced it would accept junk-rated Greek government bonds as collateral as part of wide-ranging measures to ease lenders’ access to liquidity, protothema.gr reports.
The Frankfurt-based institution said it would temporarily increase its risk tolerance in order to support credit to the economy. The package signed off by the Governing Council on Tuesday also includes easier conditions for the use of additional credit claims, and a general reduction of haircuts, based on a statement on the ECB’s website.
While Tuesday’s move will provide relief to banks across the 19-nation euro area, it’s a particular nod to Greece, whose banks have tried to raise funds as the nation’s sovereign bonds had been ineligible to be used in exchange for refinancing loans. The last time Greek notes were accepted as collateral at the ECB was in mid-2018 when the country exited its last bailout program.
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