{"id":11337,"date":"2015-08-21T17:17:50","date_gmt":"2015-08-21T22:17:50","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11337"},"modified":"2015-08-21T17:17:50","modified_gmt":"2015-08-21T22:17:50","slug":"german-newspaper-accuses-spains-central-bank-of-hiding-collateral-risks-from-ecb","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11337","title":{"rendered":"German Newspaper Accuses Spain\u2019s Central Bank of Hiding Collateral Risks from ECB"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/08\/21\/german-newspaper-accuses-spains-central-bank-of-distorting-collateral-risks-ecb-too-busy-to-check\/\" target=\"_blank\">German Newspaper Accuses Spain\u2019s Central Bank of Hiding Collateral Risks from ECB<\/a><\/h3>\n<p><strong>Shoddy collateral labeled\u00a0\u201cECB-eligible\u201d is a great deal for banks.<\/strong><\/p>\n<p><b><i><\/i><\/b>Since the financial sectors of Southern Europe and Ireland hit the rocks during the height of Europe\u2019s sovereign debt crisis, many of their respective banks have grown dependent on the generosity of the\u00a0ECB \u2013 a generosity that, as Greece recently learned to its great cost, has its limits.<\/p>\n<p>In the last three years, the banks of Europe\u2019s biggest bailed out economy, Spain, have received ultra-low interest loans from the ECB worth some \u20ac140 billion. To obtain that liquidity, the banks are required by law to deposit collateral with the ECB. However, Germany\u2019s leading business and financial newspaper Handelsblatt now\u00a0<a href=\"https:\/\/global.handelsblatt.com\/edition\/245\/ressort\/finance\/article\/the-ecbs-collateral-risk?0888\">reveals<\/a>\u00a0that some Spanish banks have received special treatment from Spain\u2019s\u00a0central bank, the Banco de Espa\u00f1a, some of whose officials have shown no qualms about bending the rules:<\/p>\n<blockquote><p>Handelsblatt has learned that the Spanish central bank repeatedly stretched the ECB rules recently. It approved securities as collateral that were not sufficiently creditworthy. In addition, other bonds were \u201cECB-eligible,\u201d but the discount on those bonds should have been higher than it was and the amount of money received in return lower.<\/p>\n<p>This Spanish laissez-faire attitude has consequences for the rest of Europe. On the one hand, it exposes the ECB to the risk of being left with low-quality securities in the event of a bank failure. This would ultimately become a burden for European taxpayers.<\/p>\n<p>On the other hand, it is advantageous for banks if their securities are unjustifiably classified as \u201cECB-eligible,\u201d because such bonds are easier to sell and at good prices.<\/p><\/blockquote>\n<div>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>German Newspaper Accuses Spain\u2019s Central Bank of Hiding Collateral Risks from ECB Shoddy collateral labeled\u00a0\u201cECB-eligible\u201d is a great deal for banks. Since the financial sectors of Southern Europe and Ireland hit the rocks during the height of Europe\u2019s sovereign debt crisis, many of their respective banks have grown dependent on the generosity of the\u00a0ECB \u2013 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,8359,5660,233,281,285,743,8360,6118],"class_list":["post-11337","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-collateral-risk","tag-don-quijones","tag-ecb","tag-europe","tag-eurozone","tag-spain","tag-spanish-central-bank","tag-wolf-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11337","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11337"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11337\/revisions"}],"predecessor-version":[{"id":11338,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11337\/revisions\/11338"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}