Week 9 ECB tightens collateral rules for Greek debt

Here is our third piece of news in addition to the video introduction below! We posted ahead of schedule since we would like you to know more about how the situation goes! 

(Week 9):http://www.ft.com/intl/fastft/273241/post-273241

Related concepts:
Global monetary cooperation
International Trade
Economic partnership/interdependence

The European Central Bank tightened Greece's access to cheap liquidity, thus they can't repay their debts by issuing junk-rated bonds. Analysts say that unless Greece comply with the bailout programme, the European Central Bank will not reinstate the waiver. They also say that bank runs will follow. On the other hand the Greek government debts can still access Emergency Liquidity Assistance. Whether the Bank of Greece chooses help, limits are stilled imposed on accepting sovereign debts as collateral. The Greek government's plans to fund itself through the four-month period partly through the issuance of short-term Treasury bills in exchange for central bank cash.

The Financial Times

Macroeconomics Vocab Boost - 1 Troika

You may be wondering: what is the "Troika" that Yanis Varoufakis, the Finance Minister of Greece keeps talking about?

He says the government will not negotiate over the Greek bailout conditions with the "troika" team from the EU and IMF.

We include a definition for your reference:

The term Troika, which comes from the Russian meaning 'group of three', was increasingly used during the Eurozone crisis to describe: 

The European Commission
International Monetary Fund
European Central Bank

They form a group of international lenders that laid down stringent austerity measures when they provided bailouts, or promises of bailouts for indebted peripheral European states – such as Ireland, Portugal and Greece – in the financial crisis.

Credits from: Financial Times

Photo credits to: ekathimerini.com

Sound familiar right? Hope you like it!

ECB Refused Greek bonds as collaterals! 歐洲央行拒收！希臘公債比垃圾還垃圾？

Please have a quick look: https://www.youtube.com/watch?v=881hL05cIx0

歐洲央行拒收！希臘公債比垃圾還垃圾？ -57金錢爆-2015-0205-3/3

The European Central Bank has just announced, that they no longer allow banks to use Greek government debt as collateral for loans!

This shows their mistrust towards Greece about their ability to repay their debts. Analysts say that unless Greece can come to an agreement with the Troika, the European Central Bank will not reinstate the waiver.

The video below explains the background and the possible reasons for this move- hope it helps!

Coming up next: your Marcoeconomics vocab boost- stay tuned!

Video Summary:
The announcement by ECB led to a plunge in prices of Greek Exchange Traded Funds (ETFs). This shows the lack of confidence of ECB towards Greece, as its action implies that the European market is better off without Greece. Greece banks' access to a key source of funds, because of this, is restricted. 

Greece keeps making promises by putting forward numerous timetables, but it cannot guarantee their repayment of loans. The extreme left-wing party who has won the election by making unachievable promises, such as raising minimum wage.

Week 5 Greece’s Feisty Finance Minister Tries a More Moderate Message

Hey guys miss me? Here comes our second piece of news! (Week5): http://www.nytimes.com/2015/01/30/business/international/greeces-feisty-finance-minister-tries-a-more-moderate-message.html?_r=1

Related concepts:

GDP

Budget surplus

Stock exchange market

Social depravity

Marxist

Greece is counting on creditors to provide debt relief, while much of the rest of the debt is in the form of loans from other European Union governments, which do not want a write-down that would cost their taxpayers.

Yanis Varoufakis , the finance minister of Greece, suggested that Greece could finance its obligations by reducing the target of primary surplus, and Athens would hold the level to 1 to 1.5 %of GDP, instead of 4.5% demanded by creditors.

Greece owes private creditors €460 million that comes due in July.The European countries are now focusing on how Greece would pay for bonds falling due without taking a €7 billion installment.

The New York Times

Week 4 Merkel rules out more debt relief

Please take a look: http://www.bbc.com/news/world-europe-31072321

Here comes our first piece of news! Don't miss out any updates! (Week 4)

Related concepts:
Fiscal austerity
Unemployment
GDP
Globalization

The left-wing party Syriza just won in the election in Greece. This will be making huge difference towards the Greece economy. They promised to write off most of the debt which is a colossal 175% of its GDP and stop the austerity measures, which will bring great impact to the whole eurozone. However, Greece is facing a 25% of unemployment rate, youth unemployment almost 50% and 25% of economic shrink currently. The worsening economic situation under austerity measures may be leading the voters towards the left-wing party so as to fight for better lives.