The European Central Bank has suspended the eligibility of Greek sovereign debt as collateral for its liquidity operations, starting from February 11th.
In a press release, the European Central Bank, who are having a governing council meeting today, explained their decision saying that it is currently impossible to assume a successful conclusion of the current Greek program. In other words, the ECB doesn't see Greece complying with existing bailout rules.
It is clear from the press release that the governing council also approved the Greek Central Bank issuance of Emergency Liquidity Assistance to the Greek banking system to cover any liquidity shortfall caused by today's move.
The move from the ECB today is a copy of the suspension of Greek debt that occurred inFebruary 2012.
Following the 2012 suspension, the Greek central bank issued Emergency Lending Assistance (ELA) - a national central bank level liquidity operation outside of normal ECB monetary policy - to Greek banks that grew to total 106bn euros by August 2012.
