18 Feb 2015
Greek noise in the right direction - BBH
FXStreet (Guatemala) - Analysts at Brown Brothers Harriman explained that while European negotiations with the new Greek government have yet to conclude, the noises are in the right direction.
Key Quotes:
"Diplomacy is about nuances. It appears that some agreement on extending loans, but not necessarily the so-called bailout program and conditions may be in the works."
"To be sure, a new agreement may not resolve any of the substantial issues, but it would maintain the principle of the irreversibility of EMU and avoid an immediate crisis. Greek bonds and stocks are higher, with bank shares outperforming the market. "
"Although the ECB rarely offers direct comments about ELA, media reports will be watched today for insight into the central bank's review of Greece's ELA."
"With oversight authority over Greece's largest banks, the ECB can know whether the banks suffer from a liquidity squeeze, which would still allow for ELA borrowing, or a solvency issue, for which ELA borrowing is not allowed. Most likely ELA borrowing will be extended as the politicians hammer out some compromise."
"Cutting Greece off would likely precipitate an existential crisis. The ECB would not take this decision alone."
Key Quotes:
"Diplomacy is about nuances. It appears that some agreement on extending loans, but not necessarily the so-called bailout program and conditions may be in the works."
"To be sure, a new agreement may not resolve any of the substantial issues, but it would maintain the principle of the irreversibility of EMU and avoid an immediate crisis. Greek bonds and stocks are higher, with bank shares outperforming the market. "
"Although the ECB rarely offers direct comments about ELA, media reports will be watched today for insight into the central bank's review of Greece's ELA."
"With oversight authority over Greece's largest banks, the ECB can know whether the banks suffer from a liquidity squeeze, which would still allow for ELA borrowing, or a solvency issue, for which ELA borrowing is not allowed. Most likely ELA borrowing will be extended as the politicians hammer out some compromise."
"Cutting Greece off would likely precipitate an existential crisis. The ECB would not take this decision alone."