Fra Guardian
The European Central Bank has clarified some of the rules on the emergency liquidity assistance, a day after tightening the conditions for Greece. In a document on its website the ECB suggested it was concerned that loosening the rules for Greece could lead others to act less responsibly. Bloomberg reports:
The Eurosystem’s functioning could be disrupted by “provision of ELA at overly generous conditions, which, in turn, could increase the risk of moral hazard on the side of financial institutions or responsible authorities,” the ECB said in a document published on its website Tuesday. “The objective of ELA is to support solvent credit institutions facing temporary liquidity problems. It is not a monetary-policy instrument.”
The document on the ECB’s financial-risk management clarifies the conditions surrounding emergency bank aid at a time when policy makers are restricting the provision of such funding to Greek banks. The reference to moral hazard indicates that officials are worried that bending the liquidity rules for Greece, as the country heads for a possible default, may lead future recipients to act less responsibly.
On Monday, the ECB increased the discounts on collateral for lenders receiving ELA from the Bank of Greece. That makes it more difficult for banks to access the funds that have kept them alive as deposit withdrawals accelerated amid uncertainty over the country’s place in the euro.
Updated
Marks & Spencer boss Marc Bolland said he felt it was important to remain in Greece where the retailer has 20 stores via a joint venture that has been in place since 1978.
He told reporters following a trading update: “We have taken steps to continue to trade there at the moment. The situation might change every day but over the last week stores have been trading at 60% to 70% [of the level of normal sales]. At a time when people are only able to get €60 out of a cash machine, that’s remarkable.” He said staff had been paid.
Bolland said Greece made up about 5% of M&S’s international business and so was “very small” but he added: “We feel it is important to stay in Greece.”
Germany’s Gabriel: letting Greece into euro was a mistake
German vice chancellor Sigmar Gabriel has admitted it was a mistake to allow Greece into the euro.
Here’s a translation of the report:
SPD leader Sigmar Gabriel has for the first time admitted that it was a mistake to allow Greece to join the euro zone. “The entry of Greece into the euro is carried out from today’s perspective, very naive,” Gabriel said in an interview with Stern. “Worse is that all have watched far too long” as the country fell deeper and deeper into crisis, added the Vice-Chancellor.
Full report here (in German)
