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The European Central Bank and the Bank of Greece have addressed a strict recommendation to the local financial institutions not to buy more government securities than allowed by regulations. According to current regulations, Greek banks may not hold bonds that exceed the amount of 3.5 billion euro and the Greek state may not issue bonds of over 15 billion euro per month. The recommendation is a prerequisite to legally bound banks to comply.
    This actually means that Greek banks will not be able to participate in the two auctions of short maturity bonds totalling 2.4 billion euro that are planned for April, as they already hold the maximum amount of bonds. Therefore, the government of Alexis Tsipras will find it even more difficult to provide liquidity for public spending, since it is known that the interest of foreign investors in Greek bonds is not sufficient and it mostly relies on local banks to provide cash for government spending.
    In the same letter, the European Central Bank and the Bank of Greece warn local banks that they will no longer accept government bonds as collateral for providing liquidity to banks.