ECB Doubles Down Against Reprofiling, Would Not Take Greek Debt As CollateralNick Nasadupdated May 19, 2011TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.The Greek saga took another interesting turn today, though it will likely sow the seeds of further uncertainty around what to do next with Greece. As European governments seemed to move closer to some sort of “soft restructuring” of Greek debt following the eurozone finance minister meeting early in the week, we have seen a strong push back by the ECB which is adamantly against the idea. Today, we see the ECB double down on their pronouncements by letting it be known that any type of reprofiling of Greek debt would put in jeopardy the central bank’s ability to use Greek sovereign debt as collateral. From imarketnews.com: “Currently, the ECB takes Greek debt as collateral at nominal value, regardless of the rating, with a pre-defined haircut. However, the central bank has the option to “reject assets, limit the use of assets or apply supplementary haircuts to assets submitted as collateral in Eurosystem credit operations” on the grounds of prudence. Any decision to remove Greek debt from the list of eligible collateral would no doubt lead to a meltdown of the Greek banking system, which has been kept afloat by the ECB’s generous liquidity provision against even low-graded paper. It would also make life harder for other Eurozone banks which hold Greek debt and use it almost exclusively for refinancing at the central bank, benefiting from crisis-spurred change in collateral rules. In short, the central bank’s threat of rejecting Greek government paper should debt obligations not be honored in full means that no kind of restructuring in the Eurozone could ever be “soft”. The ECB has toughened its stance, making it more difficult for governments to head down this road.” Nick NasadChief Market Analyst FXTimesInformation and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis. Editorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.