The European Central Bank announced it is revoking the so-called waiver (exceptionally guaranteed government bonds), effective on August 21, a move that had been expected.
As stated, due to the termination of the rescue programme, “the Governing Council decided that as of August 21st 2018, the Eurosystem’s uniform criteria and minimum credit ratings should be applied to marketable securities issued or guaranteed by the Hellenic Republic and that these securities will be subject to the uniform valuation haircuts set out in Guideline (EU) 2016/65 of the European Central Bank.”
The development had been previously announced by ECB chief Mario Draghi, with some banking circles saying that there will be some minor effects on the liquidity front, as the liquidity that the Greek banking system has obtained from these deposits amounts to 3.5 billion euros.
It is worth noting that the pledges that will return to the banks can potentially be placed in the repo market and the liquidity that could be raised is expected to be higher, as the ECB accepted them with a high haircut…. / IBNA