Friday, August 26, 2011

Last Stand for the Greek Banks: Final Emergency Financing Fund Activated

In a move described as the "last stand for Greek banks", the embattled country's central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night, reports the UK's Telegraph.

Raoul Ruparel of Open Europe told The Telegraph: "The activation of the so-called ELA looks to be the last stand for Greek banks and suggests they are running alarmingly short of quality collateral usually used to obtain funding."

He added: "This kicks off another huge round of nearly worthless assets being shifted from the books of private banks onto books backed by taxpayers. Combined with the purchases of Spanish and Italian bonds, the already questionable balance sheet of the euro system is looking increasingly risky."

Bottom line: The ECB appears very likely to join the global money printing brigade very soon.

1 comment:

  1. Tweet from Roubini a couple hours ago

    Pragmatic Draghi's first policy action, as new ECB Prez, will be to cut - not raise - the policy rate and have easier monetary policy