Reuters — The European Central Bank reinstated Greek banks’ access to its cheap funding operations on Wednesday, allowing lenders to come off an expensive emergency lifeline after more than a year.
The ECB excluded Greek banks from access to the regular funding mechanism early last year to place Athens under pressure to accept the terms of the bailout deal. Greek Banks have been relying on Emergency Liquidity Assistance ever since.
While Greek debt is still rated “junk” by credit agencies, the ECB waived its minimum credit rating requirement, letting banks post government-guaranteed debt as collateral in exchange for normal funding, a big step in normalising their operations and reducing costs.
The interest rate on Emergency Liquidity Assistance is around 1.5 percent, well above the ECB’s main refinancing rate, currently set at 0 percent.
