Financial Times on Tuesday reported that the European Central Bank is considering a ban on the purchase of short-term Greek state debt by Greece’s systemic banks, a move that effectively cuts off a key source of financing for an already cash-strapped Athens.
According to sources reportedly close to the European central bank in Frankfurt as well as in Brussels, the ECB’s board approved a proposal tabled by supervisors at the central bank to make recent warnings to Greek banks against loading up on their sovereign’s short-term debt — T-bills — legally binding.
In it worth reminding that the ECB and the Bank of Greece have set a limit of 3.5 billion euros on the amount of T-bills that lenders can use as collateral for central bank liquidity.
Of course, the ECB report, which according to sources has already been sent, coincides with concerns that Athens will run out of cash in mid April.