ECB steps up financial pressure on Greece to reach deal, limits borrowing options for banks

MarketsAssociated Press

The European Central Bank has added pressure on the Greek government by withdrawing a key borrowing option for the country's banks.

The ECB on Wednesday said Greek banks could no longer access ECB credit by using Greek government bonds or bonds guaranteed by the government.

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The ECB had allowed the use of Greece's junk-rated bonds as collateral because the government was getting a financial lifeline though a bailout program that expires Feb. 28. The ECB said in a statement that prospects for a new deal appear uncertain.

Greece's new government has rejected the austerity conditions attached to the bailout loans, saying cutbacks have devastated the economy. It is seeking a new agreement to avoid default and possible departure from the shared euro currency.