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Emergency liquidity only for solvent banks - ECB's Praet
February 5, 2015 / 12:37 PM / 3 years ago

Emergency liquidity only for solvent banks - ECB's Praet

FRANKFURT, Feb 5 (Reuters) - Only solvent banks should be granted emergency central bank funding, senior European Central Bank policymaker Peter Praet said on Thursday.

The ECB said late on Wednesday it would no longer accept Greek government bonds as collateral for funding, shifting the burden onto Athens’ central bank to finance its lenders with so-called emergency liquidity assistance (ELA).

The ECB’s move means the Greek central bank will have to provide its banks with billions of euros in ELA in the coming weeks. However, the ECB Governing Council can restrict such funding if a two-thirds majority agrees.

Another heavyweight ECB policymaker, German Jens Weidmann, said in a newspaper interview on Thursday that the ECB should be strict in granting emergency funding to banks.

Reporting by John O'Donnell; Writing by Paul Carrel; Editing by Alison Williams

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