The ECB yesterday declared that it would no longer accept Greek government bonds, nor government guaranteed bank bonds in its liquidity operations.

In practice this means that Greek banks will no longer be able to take part in the ECB’s regular liquidity operations as of 11 February. It had been expected that the ECB would continue to accept Greek paper at least until Greece’s bailout extension finishes at the end of the month, when Greece’s non-investment grade status would render its paper ineligible.

However, the ECB brought this forward given the new government’s stated intention that it wishes to tear up the terms of the bailout programme. The ECB said that Greek banks will still be able to obtain liquidity in the Emergency Liquidity Assistance programme from its own central bank (at least for now), but this move indicates a hardening of the ECB’s stance with the new government.