What the ECB's Move on Greek Government Debt Is Really All About
Greek financial institutions have only some €21 billion of exposure to Greek sovereign debt
Yanis Varoufakis, Greece's finance minister
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In a press release that jolted the markets, the ECB announced it will no longer accept Greek government debt as collateral starting next week. But this news is not necessarily a potential liquidity disaster for Greek banks.
The Greek banking system is not particularly reliant on Greek sovereign debt as collateral. Figures from the Bank of Greece show that Greek financial institutions currently have about €21 billion ($24 billion) of Greek sovereign exposure. Furthermore, this debt has already been subject to valuation haircuts of up to 40 percent when used as collateral at the ECB.