Klaas Knot: Default would spell trouble for Greek banks

Greek banks are solvent and could withstand some stress but would run into trouble if the Greek government were to default, European Central Bank Governing Council member Klaas Knot told the Dutch parliament on Tuesday.

Knot, who is also the head of the Dutch central bank, told the finance committee that Greek banks? collateral would no longer be accepted as security against loans by the ECB in the case of a default.

Greek banks hold a lot of government debt and ?that would become more problematic at the moment that a default actually takes place.?

Knot declined to speculate on what a default might mean, saying only that ?a whole bunch of things would happen.?

?As long as the default doesn?t occur, and as long as there is perspective for an agreement between creditors and Greece that would avoid a default, the collateral that we accept will be valued at the normal value.?

[Reuters]