ECB Suspends Collateral Rules Greece

The ECB has agreed to suspend the minimum credit rating for Greek collateral.

This means that even if the other rating agencies cut Greece’s creditworthiness below investment grade, as S&P did toward the end of last month, the ECB will still accept Greece’s sovereign bonds as collateral.

This is important because it means that ECB policy is no longer hostage to the rating agencies, which has at best a tarnished reputation in the market. However, it does raise questions over the politicization of the ECB.