ECB Ups The Ante on Greece

The European Central Bank has announced that it it restricting Greek access to its direct liquidity lines, citing concerns about the country’s commitment to existing bailout pledges. This means that Greek sovereign debt can no longer be used as collateral for lines of credit. Greek lenders must now apply for funding from their national central bank at higher rates.

The ECB is quoted by Bloomberg:

“The ECB today decided to lift the waiver affecting marketable debt instruments issued or fully guaranteed by the Hellenic Republic.

The Governing Council decision is based on the fact that it is currently not possible to assume a successful conclusion of the program review and is in line with existing Eurosystem rules.” 

The Greek government is spinning the line that the ECB action puts pressure on the Eurogroup to quickly strike "a mutually beneficial deal".

This is either naive, or disingenuous. The ECB action is designed solely to pressure Greece to decide as to whether it wishes to honour its debts or leave the Euro.