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Greece may get new debt waiver if it strikes deal: ECB's Nowotny
February 5, 2015 / 2:08 PM / 3 years ago

Greece may get new debt waiver if it strikes deal: ECB's Nowotny

VIENNA (Reuters) - The European Central Bank may again accept Greek bonds in return for funding should Athens agree on a new bailout program with international creditors, ECB Governing Council member Ewald Nowotny was quoted on Thursday as saying.

The ECB decided on Wednesday to revoke a waiver allowing it to accept Greek debt as collateral, causing Greek borrowing costs to soar and bank shares to plunge. Nowotny told the website that the ECB step was in line with its rules and did not mark a special sanction for Greece.

“An alternative would have been to make the step dependent on the outcome of future political negotiations, but that was exactly what the Council did not want,” Nowotny said in an interview published on Thursday.

“The appearance should not arise that the ECB is quasi building up a threat of force and imposing political conditions. We have our rules. What politicians address is the business of politicians,” he said.

“If in the course of negotiations it comes to a (new bailout) program, then of course a waiver is conceivable again, but we are not part of the negotiations.”

Nowotny said the ECB ended Greece’s waiver on minimum debt ratings for state debt because “a successful conclusion of the rescue program is no longer expected at the moment”.

But it was important that Greek banks maintained their counterparty status, he said, because health checks of bank balance sheets last year showed they fulfilled capital rules. They could still arrange finance via the Greek central bank.

Asked about the treatment of state-backed Greek bank debt, he said:

“That is something different. Based on an earlier ruling bank bonds that became collateral via a state guarantee will no longer be recognized as collateral at the ECB from March 1. That this happens now is a coincidence. Greek state bonds are no longer ‘capable of security’ from Feb. 11, then state-guaranteed bank bonds from March 1.”

Reporting by Michael Shields; Editing by Mark Heinrich

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