The ban is expected to pose a challenge to Greece’s government, which faces major debt repayments in early April, people familiar with the matter said.
ECB’s latest move is said to put pressure on the government in Athens to find an agreement with its international creditors to unlock billions of euros in bailout funds. Greece is heavily dependent on foreign aid.
ECB president Mario Draghi speaking to the European Parliament denied the ECB’s act and said: "We haven’t created any rule for Greece, rules were in place and they’ve been applied." The Telegraph reported.
The central bank’s governing council has approved the new restriction from the ECB’s bank supervisors, which was conveyed to the Greek banks in a letter, according to media sources.
Recently ECB undertook various policies in a bid to restrict the amount of funding the Greek government can obtain by selling Treasury bills.
A €3.5bn cap has been set on the amount of T-bills that can be used by the banks for funding through the emergency lending assistance program of ECB.
So far Greece’s government could repay maturing T-bills by selling new ones.
Foreign investors have reduced their bids and if Greek banks fail to replace them, the stock of outstanding T-bills will fall prompting the government to look for alternative source of cash to repay them.
The pressure on T-bills is said compel Prime Minister Alexis Tsipras to draw up and begin implementing the economic overhauls that are required by Greece’s creditors.
Image: Building complex of the European Central Bank in Frankfurt, Germany. Photo: courtesy of Epizentrum
