Forex News – ECB Council member Nowotny suggests ECB decide what collateral to accept

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Forex News: Euro rises after Government survives late night confidence voteEuropean Central Bank Governing Council member Ewald Nowotny said it’s up to the ECB to decide what collateral it accepts and it “should not be totally dependent on rating agencies.”

“It is our own responsibility, our own decision,” he told CNBC. “We have proved this in the case of Ireland, Greece and Portugal, with regard to what kind of collateral we accept. So there is a certain case for independence. But of course, not with regard to rating agencies but with regard to our own statutes, there are limitations.”

Nowotny, who is also Governor of the Austrian National Bank, spoke in contrast to ECB President Jean-Claude Trichet’s warning that the central bank won’t accept Greek government bonds as collateral for loans in the event of a default or “credit event.”

The ECB until now has proved a major stumbling block to agreeing a second rescue plan for Greece as it has threatened to refuse to accept restructured Greek bonds as collateral in its lending operations in the event of a default or a selective default.

European leaders hold a summit on the euro zone crisis on Thursday, and any sign the ECB could be open to a compromise on the collateral it accepts at its funding operations would increase the chances of a deal for Greece.