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ECB Pulls The Trigger: Blocks Funding To Greece Via Debt Collateral - Full Statement

Tyler Durden's picture


Just what the market had hoped would not happen...


What this means simply is that since Greek banks are now unable to pledge Greek bonds as collateral and fund themselves, and liquidity is about to evaporate, the ECB has effectively just given a green light for Greek bank runs, as suddenly it has removed, both mathematically but worse politically, a key support pillar from underneath the already bailed out Greek banking system, (or merely a negotiating move to let Greece see just what kind of chaos this will create ahead of the big D-Day on Feb 25th when ELA could be withdrawn).

And now finally, after many years of investing in ECB repo collateral, pardon Greek debt, Greek banks finally will ask what the "fundamental" value of all that Greek government debt they bought really is. Judging by the Greek ETF's reaction, the answer is lower.

The only question now is whether the Greek Central Bank, which the ECB said is now sufficient to meet bank liquidity needs (via the ELA which the ECB has not yanked... yet: it has given Greece until February 28 before this final prop is yanked and Greece is left to drown), is allowed to print Euros. If not, the Greek experiment at trying to stick it to Europe is about to crash and burn spectacularly.

Joking aside, what is really at stake now, if only for Greece, is everything: Syriza either folds, and cedes by withdrawing all demands, thus effectively ending its mandate less than 2 weeks after coming to power, or it exits the Eurozone.

Press Release From ECB



4 February 2015 - Eligibility of Greek bonds used as collateral in Eurosystem monetary policy operations


ECB’s Governing Council lifts current waiver of minimum credit rating requirements for marketable instruments issued or guaranteed by the Hellenic Republic


Suspension is in line with existing Eurosystem rules, since it is currently not possible to assume a successful conclusion of the programme review


Suspension has no impact on counterparty status of Greek financial institutions


Liquidity needs of affected Eurosystem counterparties can be satisfied by the relevant national central bank, in line with Eurosystem rules


The Governing Council of the European Central Bank (ECB) today decided to lift the waiver affecting marketable debt instruments issued or fully guaranteed by the Hellenic Republic. The waiver allowed these instruments to be used in Eurosystem monetary policy operations despite the fact that they did not fulfil minimum credit rating requirements. The Governing Council decision is based on the fact that it is currently not possible to assume a successful conclusion of the programme review and is in line with existing Eurosystem rules.


This decision does not bear consequences for the counterparty status of Greek financial institutions in monetary policy operations. Liquidity needs of Eurosystem counterparties, for counterparties that do not have sufficient alternative collateral, can be satisfied by the relevant national central bank, by means of emergency liquidity assistance (ELA) within the existing Eurosystem rules.


The instruments in question will cease to be eligible as collateral as of the maturity of the current main refinancing operation (11 February 2015).

In short: there is about 1 week before a key liquidity support of the Greek financial system is yanked.

*  *  *

Here is The Greek Government's response...

This decision does not reflect any negative developments in the financial sector of the country and comes after two days of substantial stabilization . According to her the European Central Bank ( ECB ) , the Greek banking system remains adequately capitalized and fully protected through access to the EIA .


The European Central Bank ( ECB ) , taking and announcing this decision puts pressure on the Eurogroup to proceed rapidly to conclude a new mutually beneficial agreement between Greece and its partners.


The government daily widens the circle of consultation with partners and institutions to which they belong , remains at the target social salvation program approved by the vote of the Greek people , and consult with a view to drawing up European policy that will finally end the hitherto self-reinforcing crisis of Greek social economy .

*  *  *

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Wed, 02/04/2015 - 16:43 | 5744326 Automatic Choke
Automatic Choke's picture

go long feta, quick!

Wed, 02/04/2015 - 16:44 | 5744330 kaiserhoff
kaiserhoff's picture

Party on, Dudes.


Wed, 02/04/2015 - 16:44 | 5744339 flacon
flacon's picture

I just handed out vomit bags on stocktwits to delusional SPY call owners. 

Wed, 02/04/2015 - 16:47 | 5744344 Headbanger
Headbanger's picture



Wed, 02/04/2015 - 16:47 | 5744364 The Black Bishop
The Black Bishop's picture

Whow, ECB playing chicken with the new Greek government... who has the most to loose and the most to gain I wonder?


Que Greexit


Question for the day:

"What shall we call the new river of tears about to form in Brussels?"

Wed, 02/04/2015 - 16:50 | 5744377 sodbuster
sodbuster's picture

C'mon Greece! Grow a pair!! Tell those CBer's to go f**k themselves!!! Let's get the ball rolling!!

Wed, 02/04/2015 - 16:55 | 5744397 ZerOhead
ZerOhead's picture

< Apocalypse now

< Apocalypse later

I think they already kinda did...

Wed, 02/04/2015 - 16:55 | 5744415 Tom Servo
Tom Servo's picture

Greek bank holiday / bail in tomorrow starting @ 8 am eastern.


Cyprus template back in action...



Wed, 02/04/2015 - 16:59 | 5744451 franzpick
franzpick's picture

Drop the other shoe Alexis: Pull out and show Eeee Uuuuu your 40 caliber platform.

Wed, 02/04/2015 - 17:02 | 5744467 MillionDollarBonus_
MillionDollarBonus_'s picture

I worry that younger people in Europe are starting to emigrate and find work elsewhere, leaving the older generations that raised them to fend for themselves. It is simply unacceptable and selfish that young adults refuse to contribute to the economy and pay their fair share of taxes, when Europe has given them top quality education and invested millions of Euros in their futures. Younger generations owe it to their elders to pay their fair share.

Wed, 02/04/2015 - 17:05 | 5744484 Tom Servo
Tom Servo's picture

^ kek


Wed, 02/04/2015 - 17:08 | 5744504 Aaaarghh
Aaaarghh's picture

ffs, announce greece will no longer repay any part of its debt and a return to the drachma. The pain is on whether they stick with europe or not..

Wed, 02/04/2015 - 17:09 | 5744519 Automatic Choke
Automatic Choke's picture

did chelsea's hubby at least cash out his remaining 48% today, or is he riding it into the dust?

Wed, 02/04/2015 - 17:15 | 5744542 pods
pods's picture

Wait till they replace "Greek" with "Italian" or "Spanish."

THAT will be when things go boom.


Wed, 02/04/2015 - 17:17 | 5744575 whotookmyalias
whotookmyalias's picture

This is turning out exactly the way we knew it would, said no banker publicly.


Wed, 02/04/2015 - 18:03 | 5744790 Haus-Targaryen
Haus-Targaryen's picture

In the coming hours well see if the new Greek finmin has war games this out previously and will act -- or if this took him off guard and will be forced to react.

I bet we start seeing atm lines in Greece before last call at whatever bar you guys are sitting in on the east coast.

Wed, 02/04/2015 - 18:08 | 5744811 nuubee
nuubee's picture

What ammunition does he have left? He already said he doesn't want more debt. Seems like the ECB is actually giving Greece what it asked for.

It's too bad too, that was such a nice little patch of socialism they had there, would be a shame to see anything happen to it.

Wed, 02/04/2015 - 18:11 | 5744825 Manthong
Manthong's picture

.. pledge Greek bonds as collateral..

is that something like offering Paris Hilton as a virgin?

Wed, 02/04/2015 - 18:19 | 5744861 Bangin7GramRocks
Bangin7GramRocks's picture

She does have some new nice titties!

Wed, 02/04/2015 - 18:24 | 5744879 Alea Iactaest
Alea Iactaest's picture

MDB, I usually upvote you. This one is just a little too possible, and I worry that giving you an upvote could be used against me in the future... as indicative of my acceptance of your position. Sorry, red on this one.

Wed, 02/04/2015 - 19:25 | 5745128 Publicus
Publicus's picture

Greek should just print Euro.

Wed, 02/04/2015 - 20:19 | 5745304 BigJim
Wed, 02/04/2015 - 23:59 | 5745995 Pairadimes
Pairadimes's picture

Maybe we will finally get the long overdue Grexit. Eventually, all the other EU nations will be Greece, save one. The Euro is just a Deutsche Mark in drag.

Thu, 02/05/2015 - 05:09 | 5746306 Haus-Targaryen
Haus-Targaryen's picture

I agree with your comment, save the "save one" part.  

Germany could easily share the DM with;

- the Netherlands
- Austria
- Denmark
- Sweden
- Finland
- Estonia
- Latvia
- Lithuania
- Flanders (if it ever comes into existance (crosses-fingers))
- Luxembourg 
- Switzerland, Norway & Lichtenstein (yeah right) 

and perhaps, depending on the governments and the respective populations;

- Czech Republic
- Poland
- Slovakia

While the DM could hold its own in international markets -- the shilling and the Gilder would have a hard time not getting steamrolled over.  It would be wise for similarly situated nations to share a currency.  This was and still is the EUR's flaw.  It grouped extremely dissimilar nations under one umbrella.  

Wed, 02/04/2015 - 19:27 | 5745132 Element
Element's picture

You think the NSA is logging zh junk-button presses? Really?

Wed, 02/04/2015 - 19:36 | 5745167 Bob
Bob's picture

You're kidding, right?  Of course they are. 

I know you're kidding!

Wed, 02/04/2015 - 19:37 | 5745176 asteroids
asteroids's picture


Wed, 02/04/2015 - 20:18 | 5745297 Bob
Bob's picture

Thanks for the prompt to confirm the definition:


Fuckin A, I'd be shocked if ZH, Inc. were not selling their click database themselves.  Value is nothing if not developed for private gain on a "free market," as I understand the neo-liberal doctrine. 

Wed, 02/04/2015 - 22:11 | 5745664 disabledvet
disabledvet's picture



Wouldn't come any other way now would it...

Wed, 02/04/2015 - 22:19 | 5745701 StychoKiller
StychoKiller's picture

"The Internet is for Porn!"

Thu, 02/05/2015 - 10:43 | 5747111 Element
Element's picture

Wank off by all means, just don't press any bottons or expess any views. I'm probably in deep shit for saying this much.

Wed, 02/04/2015 - 18:29 | 5744888 Manthong
Manthong's picture

.. you know what they say about more than a mouthfull...

but the discreet gentleman would not touch what's down below even with Bill Clinton's soiled thing.

Wed, 02/04/2015 - 19:48 | 5745211 Calmyourself
Calmyourself's picture

Oh and herpes yeah she's got that too, the itchy, weepy, blisters on your nads kind...

Wed, 02/04/2015 - 20:35 | 5745359 Manthong
Manthong's picture

omigosh.. this must mean that is where Jamie Dimon's mouth is.

stuff tha,t JPM..

Wed, 02/04/2015 - 18:57 | 5745032 Spine01
Spine01's picture

HAHAHAHAHAHA......lol. lol....LOL

Sorry can't stop laughing ..... hahahahah

Wed, 02/04/2015 - 20:37 | 5745339 Manthong
Manthong's picture

If you were referring to my post.. thank you.. I like to think that my sarcasm can bring some jollies to some folks..

..allow me put this by you too,

if you think there is any honesty in the soveriegn CDS swindle.. I have a huge phallic intrument with ISDA engraved on its well-lubed tip ready for you.



Wed, 02/04/2015 - 21:23 | 5745502 FreedomGuy
FreedomGuy's picture

Socialism is fun till the loans run out.

Thu, 02/05/2015 - 01:28 | 5746154 disabledvet
disabledvet's picture

That and "until your daughter gets violated."


Once Spain, Italy and Greece are forced to reset to their local currencies (peso, lira, drachma) then I think "the muzzies" will make their move.


The Turkish Lira getting annihilated is I think "the tell."


Only time will tell if all euro denominated debt gets repudiated.


This all could happen quite suddenly as well.

Thu, 02/05/2015 - 06:59 | 5746351 Keyser
Keyser's picture

Correction, socialism is fun until they run out of other people's money to spend... Calling Janet Yellen, calling Janet Yellen....

Wed, 02/04/2015 - 20:02 | 5745245 darkpool2
darkpool2's picture

Anyone who didnt already do this before today , must have been sitting in a dark, powerless cellar with a bag over their head

Wed, 02/04/2015 - 20:51 | 5745407 Haiku4U
Haiku4U's picture

Time to consult the WOPR?

Thu, 02/05/2015 - 00:44 | 5746096 Proofreder
Proofreder's picture

Plus 10 for War Games ref.

Would you like to play a game of tic-tac-toe ?

It's much more emjoyable than Global Thermonuclear Warfare.

Thu, 02/05/2015 - 07:00 | 5746352 Keyser
Keyser's picture

WOPR would have nuked the lot of them by now...  Can you say, dead man walking?

Wed, 02/04/2015 - 17:25 | 5744618 Paveway IV
Paveway IV's picture

But why isn't Greece enough to bring down the whole global ponzi? 

Isn't this enough to screw anyone with Greek debt instruments on their books? I thought there was this whole 'dominos falling' contagion thing if anyone got stuck with worthless Greek debt? 

Anyone holding CDS on Greek debt will be looking for their sacks of gold. The bond guys surely can't claim this is anything but a default event, can they? 

Wed, 02/04/2015 - 18:45 | 5744870 Manthong
Manthong's picture

Gee Whiz.. how could you ever expect Charles to call his scheme a Ponzi?

oh.. and just look back to 2011 for how the Ponzi is handled regarding soveriegn debt.


Wed, 02/04/2015 - 17:43 | 5744694 Mercuryquicksilver
Mercuryquicksilver's picture

Replace Greek with California and EU with USA. 

Thu, 02/05/2015 - 07:00 | 5746354 Keyser
Keyser's picture

Yeah, but the numpties in Mexifornia have all those illegals flowing into the state to save their economy... Bwahahahahaha....

Wed, 02/04/2015 - 17:46 | 5744717 mkkby
mkkby's picture

Who has the stronger navy?  Greece should invade Belgium and sack Brussels.

Wed, 02/04/2015 - 20:54 | 5745414 Manthong
Manthong's picture

Yes.. yes.. yes.. Where is Themistocles when you really need him?

Wed, 02/04/2015 - 17:17 | 5744543 ZerOhead
ZerOhead's picture

I think when you are already down 50% you have to double down on stupid and hope for the best. Especially if you want to get all of Bill and Hillary's cash back.

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