Eurozone governments warned on bail-outs – FT.com

    • Eurozone governments warned on bail-outs

    • Eurozone governments should not assume the private sector will participate in a new Greek bail-out deal, the European Central Bank has warned, escalating its conflict with finance ministers over the future of the indebted country.

    • the eurozone should follow “global doctrine” on bail-outs for crisis-hit nations.

    • Mr Trichet’s comments were the closest he has come to suggesting publicly that governments abandon attempts to involve commercial banks without ratings agencies declaring a selective default.

    • It is increasingly affecting how companies and banks can fund themselves.”

    • ECB offered further support for Portugal by waiving the minimum credit rating required for Portuguese bonds used as collateral in its liquidity operations.

    • He left open whether the ECB could ignore the judgment of ratings agencies but joined other European leaders’ criticism of the firms: “A small oligopolistic [rating] structure is not what is probably desirable at the level of global finance.”

    • Mr Trichet’s ECB council colleagues have said Greek bonds would have to be excluded from eligible collateral in the event of a default – a move that would bring down the country’s banking system. In the event of a brief selective default, however, the ECB would probably allow the Greek central bank to prop up banks with emergency liquidity assistance.

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