Thursday, February 5, 2015

Greece backed into a corner after ECB snub

by Christine Pirovolakis

German Press Agency (DPA)

February 5, 2015

Greece's newly elected government found itself backed into a corner on Thursday after the European Central Bank (ECB) cut off a lifeline for its banks.

The Frankfurt-based lender said it would no longer accept the country's junk-rated government bonds as security for loans to commercial banks. Greek banks still have access to emergency lending, but at a much higher rate.

The move comes at the end of whirlwind week of campaigning across Europe by the leftist SYRIZA government, eager for support to renegotiate the terms of its bailout.

While Prime Minister Alexis Tsipras' government has backed down from demands for a debt writedown, it remains committed to its election promise of implementing salary and pension increases that run counter to existing conditions for financial aid.

Tsipras expressed optimism about finding a mutually acceptable solution with the European Union to his country's bailout woes, after talks with the bloc's top officials in Brussels and a meeting in Paris with French President Francois Hollande.

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