–Markets See Comments Implying Spain Collateral Shortage
–Comments Push Out Spanish 10-Year Yields
LONDON (MNI) – European Central Bank President Mario Draghi has
strongly hinted that he believes there is a shortage of quality
collateral in one Eurozone country.
“Well, you can see where the funding strains are in Europe and
especially in one country, and then you can imagine that they need
collateral,” Draghi said at the press conference following the ECB’s
rate decision.
Draghi also said that the ECB will keep all liquidity lines open to
solvent banks.
“If the bank is solvent, the ECB stands ready to provide all the
liquidity that they need. The ECB will keep all liquidity lines open to
solvent banks,” he said.
Draghi noted that the ECB had already taken steps to widen eligible
collateral and so ease liquidity access for Eurozone banks. This would
have to be reviewed, Draghi said, but he was clear that this wouldn’t
happen imminently.
“We think that the collateral framework will have to be revisited.
It is not something that we can come out soon with. But, as I’ve said
many time, we should present a well-organized framework of collateral
eligibility”.
The comments led to a sharp re-widening in Spanish 10-year spreads
over German bunds.
–London newsroom: 4420 7862 7492; email: ukeditorial@marketnews.com
[TOPICS: M$$EC$,M$S$$$,M$X$$$,MGX$$$,M$$CR$,MT$$$$]