Jun
16

Draghi Rules Tested by Greece as ECB Mulls Bank Solvency

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Mario Draghi’s mantra that the European Central Bank is a rules-based institution is being tested to breaking point by Greece.

The question of whether Greek lenders still meet the solvency and collateral requirements for the 83 billion euros ($93 billion) of emergency funding they currently receive is becoming ever more pressing. The ECB president, who will head a meeting of his Governing Council on Wednesday, warned this week that a positive answer can’t be taken for granted.

The Greek government’s struggle to unlock bailout funds to pay its debts automatically casts a shadow over the nation’s banks, whose financial health is tied to state guarantees on their assets. The dilemma for Draghi is that curtailing central-bank liquidity could tip the country toward capital controls and political turmoil…

Draghi Rules Tested by Greece as ECB Mulls Bank Solvency

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