Mario Draghi tightens proverbial noose

Banks are constricted and urged to not purchase T-bills

A new letter was sent to Greek banks by ECB president Mario Draghi. The letter contained a strong urging for banks to avoid exposure to Greek public debt. He suggested that not only should banks not participate in Treasure Bills but to also limit this exposure further.

 

This means that Mr. Draghi now places a stopgap on the possibility of the Greek public sector borrowing from bank subsidiaries either through T-bills or direct lending to public institutions.