GERMANY’S CENTRAL BANK has reportedly decided not to accept Irish government bonds as collateral when offered by its national banks later this year.
The Frankfurter Allegemeine Zeitung reports that the Bundesbank has decided not to accept bonds from Ireland, Greece or Portugal – the three Eurozone countries currently being funded by the EU-IMF.
Though the move will have little practical implications – German banks looking to access short-term funds will simply be told to present some other kind of asset as collateral – but may indicate a growing policy divide among Europe’s central banks.
It may also indicate that any further discussions on reorganising Ireland’s banking debts – where any deal would be reliant on the approval of the European Central Bank’s governing council – could yet prove to be very difficult.
While the European Central Bank itself had briefly stopped accepting Greek bonds as collateral – openly acknowledging that as it agreed a default, its government bonds were not worth their stated value – it resumed accepting them a few days later.
The FAZ report said the Bundesbank’s new regime would take effect from May 1, and that the matter had the approval of the ECB’s governing council.
(h/t He3 of Politics.ie)
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