ECB to cease accepting Greece govt bonds as collateral for loans

The ECB has increased pressure on Greece by making it more expensive for the country's banks to access cash.

It says it will no longer accept government bonds as collateral for loans to commercial banks. Greek debt has a junk credit rating and, under ECB rules, should not qualify as collateral for loans.

However,Greece had been granted a waiver to those rules as long as Athens was deemed to observe the terms of its bailout.

The move has prompted fears of a run on Greek lenders as the country struggles to avoid defaulting on its debts.

The European Central Bank's announcement came just hours after Mario Draghi met Greece's new Finance Minister Yannis Varoufakis.

The ECB says it took the decision to withdraw the key borrowing option for Greek banks because it cannot be certain about a "successful" deal on Greece's €240bn bailout.

In practice, it means banks will find it more expensive to get more cash and it has led to fears about shortages and runs on lenders.

The move has ratcheted up the pressure on Athens, which is trying to renegotiate the strict conditions of its rescue package.

Prime Minister Tsipras said the decision would have no adverse impact.