European Central Bank to ban embattled Greek banks from holding government bonds
Telegraph - Mar 24, 2015
The European Central Bank is set to tighten the noose on Greece a day after the president of the Bank denied the institution was “blackmailing†Athens into agreeing to bail-out conditions.
According to reports, the ECB will move to officially ban Greek banks from increasing their holdings of the country’s short-term sovereign debt, in a bid to break a potentially toxic link between lenders and the stricken sovereign.
The restriction will place a further squeeze on the cash-strapped Greek government, which could run out of money to pay wages and pensions by the end of next month.
Speaking to the European Parliament on Monday, Mario Draghi denied the ECB was acting unfairly towards the Leftist government: “We haven’t created any rule for Greece, rules were in place and they’ve been applied,†said Mr Draghi.
The ECB has emerged as the chief disciplinarian among Greece’s three main creditors.
The central bank has so far rebuffed pleas to increase the issuance of treasury bills or to resume its ordinary lending to the country.
