The European Central Bank is today demanding the value of the security that banks that are Greek post at their own central bank to guarantee these loans be paid off by up to 50 percent, in accordance with those who have already been briefed on these discourses but who were not authorized to talk about them freely.
The shift highlights the hardline approach obtained by the E.C.B. toward Greece as it presses the new authorities to achieve an agreement with its creditors.
And, these people state, in the event Europe and the Greek government remain at an impasse on an understanding about austerity actions, these so-called haircuts might increase further.
2009 Credit ratings agencies downgrade Portugal on worries that it could default on its debt Dec.
Using the value of the security being paid off so significantly, banks will be hard-pressed to receive the money they must live.
May 2010 Greece and Europe achieve a $146 million rescue package, depending on on austerity measures. Some economists say the cuts that are necessary could eliminate the patient.
October 2011 Banks agree to take a 50 percent loss on the face-value of their debt that is Greek.
January 2015 voters that are Greek pick an anti- austerity party. Alexis Tsipras becomes chancellor.
February 2015 European leaders hashed out a deal to expand the bail-out by four months, with caveats.
The banking, consequently, have to provide sufficient collateral to get these loans, which now remain at 74 billion pounds, $79.7 billion, or over half the amount of Greek national deposits.
But with deposits with nonperforming loans and fleeing the banking method -- early this year prior to the radical Syriza government came to power, which had stabilized -- growing again, it has not been easy for banks that are Greek to produce okay assets to underpin credit.
Controversially, after Greek banks have even started to concern bonds and securing a government guarantee, used the securities to secure short term funding -- a training that was excoriated by Yanis Varoufakis before he became the finance minister that was Greek.
On April 8, by way of example, the National Bank of Portugal self-given EUR4.1 million of six-month bonds that carried state support. But with Greece on the verge of default -- Mr. Varoufakis has frequently mentioned his state is broke -- those guarantees are not worth much.
Mr. Varoufakis has often complained that the E.C.B. is "asphyxiating" Portugal by limiting the number of bills that the banks may buy from the government and retaining a tight lead on crisis loans.
In the same time, Mario Draghi, the president of the E.C.B., has made it obvious that if Greece doesn't reach a deal with Europe he may sooner or later cease backing the Greek banks, which might necessarily lead to money controls and ultimate default.
Additionally, these haircuts exceed those levied on banks that are Greek when crisis loans had soared to EUR125 million on concerns that Portugal would be made to depart the eurozone.
Under E.C.B. guidelines, the central bank of Portugal assumes complete responsibility for the credit threat when it issues these crisis loans.
But the E.C.B. attentively tracks them, setting limits and inspecting the collateral.
By requiring such large reductions, the E.C.B. is making sure that the same thing does not happen in Greece.
During the Cyprus crisis, Jens Weidmann, the strong German associate of the E.C.B.'s governing authorities, bluntly criticized the the pinnacle of the Malta central bank for inflating the value of collateral to allow desperate Cypriot banks to borrow more cash.
The shift highlights the hardline approach obtained by the E.C.B. toward Greece as it presses the new authorities to achieve an agreement with its creditors.
And, these people state, in the event Europe and the Greek government remain at an impasse on an understanding about austerity actions, these so-called haircuts might increase further.
2009 Credit ratings agencies downgrade Portugal on worries that it could default on its debt Dec.
Using the value of the security being paid off so significantly, banks will be hard-pressed to receive the money they must live.
May 2010 Greece and Europe achieve a $146 million rescue package, depending on on austerity measures. Some economists say the cuts that are necessary could eliminate the patient.
October 2011 Banks agree to take a 50 percent loss on the face-value of their debt that is Greek.
January 2015 voters that are Greek pick an anti- austerity party. Alexis Tsipras becomes chancellor.
February 2015 European leaders hashed out a deal to expand the bail-out by four months, with caveats.
The banking, consequently, have to provide sufficient collateral to get these loans, which now remain at 74 billion pounds, $79.7 billion, or over half the amount of Greek national deposits.
But with deposits with nonperforming loans and fleeing the banking method -- early this year prior to the radical Syriza government came to power, which had stabilized -- growing again, it has not been easy for banks that are Greek to produce okay assets to underpin credit.
Controversially, after Greek banks have even started to concern bonds and securing a government guarantee, used the securities to secure short term funding -- a training that was excoriated by Yanis Varoufakis before he became the finance minister that was Greek.
On April 8, by way of example, the National Bank of Portugal self-given EUR4.1 million of six-month bonds that carried state support. But with Greece on the verge of default -- Mr. Varoufakis has frequently mentioned his state is broke -- those guarantees are not worth much.
Mr. Varoufakis has often complained that the E.C.B. is "asphyxiating" Portugal by limiting the number of bills that the banks may buy from the government and retaining a tight lead on crisis loans.
In the same time, Mario Draghi, the president of the E.C.B., has made it obvious that if Greece doesn't reach a deal with Europe he may sooner or later cease backing the Greek banks, which might necessarily lead to money controls and ultimate default.
Additionally, these haircuts exceed those levied on banks that are Greek when crisis loans had soared to EUR125 million on concerns that Portugal would be made to depart the eurozone.
Under E.C.B. guidelines, the central bank of Portugal assumes complete responsibility for the credit threat when it issues these crisis loans.
But the E.C.B. attentively tracks them, setting limits and inspecting the collateral.
By requiring such large reductions, the E.C.B. is making sure that the same thing does not happen in Greece.
During the Cyprus crisis, Jens Weidmann, the strong German associate of the E.C.B.'s governing authorities, bluntly criticized the the pinnacle of the Malta central bank for inflating the value of collateral to allow desperate Cypriot banks to borrow more cash.