The ECB’s statement in early November to the financial markets regarding the eligibility of repo collateral of sovereign debt has caused some heated discussion in the higher echelons of European finance policy makers, especially those in Portugal, Italy and Greece.
In answer to a question at a press conference ECB governor Jean-Claude Trichet said that the ECB would not accept collateral with a rating lower than A–. Currently only Greece is anywhere near this level (A). This change brought the ECB’s policy in line with...
