European Central Bank suspends Greek bonds collateral

The European Central Bank said today that it is suspending the use of Greek government bonds as collateral to access central bank loans as Greece carries out a debt reduction negotiated with its creditors.

The temporary step comes after Standard & Poor's downgraded Greece's credit rating to "selective default" as the country carries out a debt swap which will slash its debt.

The ECB said banks that are affected by today's collateral ruling can still borrow cash from their national central bank under emergency assistance provisions.

It added that it will start accepting Greek bonds again by mid-March when a programme for the eurozone to provide supplementary collateral to insure the ECB against losses comes into effect.

AP