Draghi will push to include Greek and Cypriot junk bonds in ABS drive

Draghi wants the ECB to ease the quality requirements in order to purchase the safer slices of Greek and Cypriot ABS, the FT reported on Tuesday. German Bundesbank has already shown its opposition to such measure– relations between the European central bank and Berlin are increasingly tense, as sources close to the lender point out – worth hundreds of billions of euros.

The move is aimed at making the programme of ABS purchases as inclusive as possible. If approved, it would enable the ECB to buy instruments from banks of all 18 eurozone member states. As the assets originated in Greece and Cyprus are potentially riskier than those from banks elsewhere in the eurozone, the ECB would compensate by purchasing smaller proportions of these securitisations.

Germany’s finance minister Wolfgang Schäuble stated those purchases would strengthen the debate about potential conflicts of interest between the ECB’s role as monetary policymaker and bank supervisor.

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