ECB to look at best Greek rating even in default

Reuters
July 5, 2011

The European Central Bank will accept Greek government bonds as collateral until all rating agencies rate them as having defaulted, the Financial Times said on Tuesday, citing a financial sector source.

The move could keep the door open for a compromise deal on Greece's debt crisis as it is not yet certain that all rating agencies would put Greek debt in a default category after a voluntary rollover of bonds to involve private sector investors in a second bailout of the debt-ridden euro zone member.

Were the ECB to refuse to accept Greek debt, it could trigger a new wave of banking turmoil that could spread through the euro zone as Greek commercial banks would have diminished access to central bank funds on which they rely.

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