Oddly, those collateral requirements are established, not by the ECB, but by the national central banks.
Under euro-system rules, national central banks can only provide ELA to solvent banks against collateral.
By reducing credit availability national central banks can contravene the euro zone's wider monetary stance.
ECONOMIST: The Bundesbank should not exert its new clout too zealously
The ECB will co-ordinate a network of national central banks, the European System of Central Banks.
Now there is only so much the European Central Bank and national central banks can do about this.
Banks are too reluctant to risk antagonising national central banks and governments.
National central banks will continue to be in charge of banking supervision.
Here the six members of the ECB's executive council are joined by the 11 heads of the national central banks participating in the euro.
The balance sheet for the whole Eurosystem (including all the national central banks) shows almost half a trillion euros in capital and revaluation reserves.
FORBES: Revised TARGET2 Paper & Implications for ECB of Cyprus Exit
More importantly, the risks associated with the bond-buying program are in fact shared across the ECB and all of the national central banks in the Eurosystem.
And on top of that there would be a huge write-off of the separate 50bn euros of Greek government bonds held by the ECB and eurozone national central banks.
Every other Tuesday it puts millions of euros up for tender and this year around 300 banks participated in bidding via their national central banks, for loans of various sizes.
In Europe, for instance, responsibility for bank supervision, and the provision of liquidity in the event of a bank panic, will officially remain with national regulators and national central banks.
Still, some people (again not me) would wring their hands about the need for the national central banks to recapitalise the ECB and there would likely be a big media kerfuffle about this.
FORBES: Revised TARGET2 Paper & Implications for ECB of Cyprus Exit
Getting national central banks to lend to the International Monetary Fund, for example, has been widely discussed - as a way of boosting the IMF's capacity to be part of a larger eurozone "firewall".
And since the European Central Bank and the national central banks insist on lending only in return for collateral, there is a danger that banks would shortly run out of collateral of sufficient quality.
Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
Now banks all over the eurozone, in Greece, Cyprus, Portugal, Ireland, Spain and Italy (as the most extreme examples), are only alive at the moment thanks to the sheer scale of the money they've been able to borrow from the ECB and from their respective national central banks.
The Germans - indeed northern Europe - have created a trap for themselves in which it is either fiscal union or a rough-hewn fiscal union in which the ECB does the heavy lifting, in defiance of its mandate and culture, and the instincts of the national central banks.
For what it's worth, eurozone finance ministers are also muttering about finding additional resources for bailouts, by having their respective national central banks lend to the International Monetary Fund, which would then lend the money back to any eurozone country that was unable to borrow in the conventional way.
However, so long as these banks retain assets of sufficient quality, they can continue to claim to be viable, or at least potentially viable - even if they are only alive because of credit they've received from the European Central Bank, for example, or from their national central banks.
One prong involves a series of bilateral loans offered by national governments, central banks or by national treasuries, which would in turn be offered with preferred creditor status to recipient nation-states in the euro zone.
FORBES: Geithner To EU: IMF Will Play A Role, But Without Fed Money
The negotiations come as governments seek new ways to rekindle growth without adding to already inflated national debts while central banks have pumped trillions of dollars into the global economy.
However, the report argues that centralisation is not politically feasible in the near future, as it would require governments to relinquish national control and deprive some central banks of one of their only remaining functions.
As well as the Bank of England, the Fed, and the European Central Bank, the national banks of Canada and Switzerland are also involved in the funding plan.
The recent currency crises in Asia, Russia and Brazil have been produced by central banks and their soft national currencies.
Under ELA, banks borrow from their national central bank, in this case the Bank of Greece, with approval of the ECB's governing council.
Bank supervision is to be left in the hands of existing national authorities in some cases central banks, in others a supervisory body or the finance ministry.
National currencies are backed by national treasuries with the power to tax and central banks with the power to print money.
应用推荐