Όλες οι κατηγορίες:

Φανή Πεταλίδου
Ιδρύτρια της Πρωινής
΄Έτος Ίδρυσης 1977
ΑρχικήEnglishGreece Will Keep Roiling the Markets

Greece Will Keep Roiling the Markets

- Advertisement -

By ANTONIA OPRITA, Real Money, the street

Those who were still hoping for a swift resolution of the issue of the Greek debt at the heart of the eurozone were left disappointed by the European Central Bank’s news conference on Thursday.

 While ECB President Mario Draghi duly announced the beginning of sovereign bond purchases next Monday, he confirmed that Greek bonds are excluded. (You can find more details about how bond purchases will work on the ECB’s website; one key issue is that they put a floor on negative yields: the central bank won’t buy government bonds whose yields are more negative than its own deposit facility rate — that’s currently at minus 0.2%). And there were other ominous signs for Greece’s already fraught relationship with the eurozone in Draghi’s conference.

- Advertisement -

Greece’s left-wing Syriza government is at loggerheads with the other eurozone member states over its bailout program. The government is insisting that it does not want an extension of the austerity that was a condition of the program, while the Troika — made up of the International Monetary Fund (IMF), the European Union and the ECB — says the conditions of the bailout must be fulfilled for Greece’s economy to be able to recover. Furious Greeks have accused the ECB of helping all other eurozone countries but theirs — there was a bit of shouting in Greek during the ECB’s conference, which this time was held in Cyprus — but Draghi denies this.

He stressed the fact that the ECB has doubled its total lending to Greece, to 100 billion euros ($110 billion) just in the past two months. That represents 68% of Greek GDP and the highest level of ECB lending in the whole of the eurozone. “The last thing that anyone can say is that the ECB is not supporting Greece,” he said.

The ECB raised the Emergency Liquidity Assistance (ELA) facility for Greek banks by 500 million euros to around 68.8 billion euros — pretty insignificant, considering that withdrawals of deposits from Greek banks in February alone have been estimated at around 6 billion euros, while official data show that 16 billion euros was withdrawn between December and January.

But Draghi rejected the idea that the ECB could raise the ceiling for the amount of T-bills it is ready to accept as collateral from Greece to help its banks further. Short-dated T-bills have been the only source of borrowing for the Greek government while it seeks to renegotiate the terms of its bailout, and the ceiling of 15 billion euros in issuance agreed with its lenders has already been reached.

The ECB is a “rule-based institution” and Article 123 of the Lisbon Treaty prevents it from doing monetary financing — financing a government’s budget deficit by buying up its debt, Draghi said. If the ECB were to raise the ceiling on the amount of Greek T-bills it accepts as collateral from its banks in the absence of a bailout program, it would risk financing the country’s debt. Things would be different if a program were in place, because then the Greek government would have access to financing itself straight from the markets, so the need to sell debt to the banks which would in turn park it as collateral with the ECB would disappear.

Draghi also explained that the rules prevent the ECB from buying Greek bonds under its newly launched QE program. The central bank cannot buy bonds that are below investment grade unless a waiver to this rule is applied. A waiver depends on the existence of a bailout program that would insure the bonds are on track to be rated investment grade again. Also according to the rules, the ECB cannot buy more than 33% of a country’s total bond issuance — and currently it holds more than that in Greek bonds. But as soon as Greece has a new bailout program in place and it pays back some of the bonds — which come due in July-August — the ECB can start purchasing Greek bonds, Draghi said.

- Advertisement -

There is of course a lot of skepticism that the ECB is indeed as “rule-based” as its president says it is. After all, for a long time the central bank has refused to implement quantitative easing on exactly the same grounds — that the rules forbid it from doing it, because it could slip into financing the eurozone countries’ debt. So today’s clarification from Draghi on the bank’s position regarding Greece’s debt is more of a political than a technical statement: it signals the unwillingness of at least one member of the Troika to make any more compromises. Investors should expect more volatility ahead for the eurozone, despite the ECB’s quantitative easing.

- Advertisement -

ΑΦΗΣΤΕ ΜΙΑ ΑΠΑΝΤΗΣΗ

Παρακαλώ εισάγετε το σχόλιό σας!
Παρακαλώ εισάγετε το όνομά σας εδώ

ΑΞΙΖΕΙ ΝΑ ΔΙΑΒΑΣΕΙΣ