How painful is it for you to rubber-stamp the emergency liquidity assistance (ELA) for Greece’s banks in volumes of more than € billion? For ELA decisions we apply our rules strictly. This works both ways: I’d really feel the pain if we didn’t observe our rules.
With lenders increasingly unwilling to extend credit against these assets, liquidity-strained institutions made increasingly distressed asset sales, which placed additional downward pressure on asset prices, thereby accelerating margin calls for leveraged actors and amplifying mark-to-market losses for all holders of the assets. The margin calls and booked losses would start another round in the adverse feedback loop.