ECB Says Greece Should Be Able To Make Its Scheduled Payment This Week And Spain No Longer Needs Emergency Funding

Tuesday, November 13, 2012 07:50
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ECB Says Greece Should Be Able To Make Its Scheduled Payment This Week And Spain No Longer Needs Emergency Funding

Tags: European debt | European zone | world economy

The European Central Bank (ECB) is confident Greece will be able to make its scheduled payment on Treasury bills later this week despite the ECB’s decision to maintain its cap on aid to the distressed country.

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The ECB decided not to extend a temporary €3.5 billion increase in the lending cap designed for European banks to use as emergency funding.
 
There were also no new steps taken to broaden the types of collateral banks can put up for new loans.
 
This week’s Treasury bill redemption is the first of multiple hurdles Greece must clear to secure its spot in the euro.
 
The Greek governmental coalition passed the austerity measure on Sunday, November 11, that had been demanded by its creditors in order to receive another payout from its aid package.
 
The ECB is also considering whether to reduce Greece’s debt burden which is expected to reach as high as 190% of its gross domestic product next year. It also is working to find enough funds to grant Greece’s request for a two-year extension to reach mandated deficit-reduction targets.

 

 

Meanwhile, Spain is no longer in need of emergency funding and is now on track to make scheduled payments. The European Stability Mechanism will overtake 30 billion that had been set aside for Spain but on which Spain has never drawn.  

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