ECB returns to accept Greek Bond

The European Central Bank (ECB) will accept again the government bonds of Greece,  junk status, as collateral in refinancing operations. The decision to reopen a source of funding, remained closed for 16 months, should help restore confidence in the greek banking sector and, according to several economists and bankers, could lead to a partial removal of capital controls in the coming days.

The Frankfurt Institute's move follows the agreement reached in late May between the Government of Athens and the country's international creditors. The agreement was a trailblazer for the allocation of approximately 7.5 billion euro as part of the bailout of Greece, thus avoiding the risk of a possible bankruptcy in the summer. The first effects are seen immediately: the greek 10-year bonds was up by 2% to 73 and makes 8%, while the three-year with a 4.75% coupon and maturity in April 2019 makes 8.8% .

The decision to re-accept Greek bonds as collateral then allow the banks in Greece to fully benefit from the Tltro II program, the stimulus measures adopted by the ECB, which allows some banks to be paid to borrow, provided that they meet certain thresholds for financing to businesses and consumers.

However, Frankfurt does not even begin to buy Greek bonds as part of the quantitative easing program. The decision will in fact be taken "at a later date", taking into account the progress made by the country in the path toward a more sustainable public debt.