Guardian live blog snippets.....
Greece's prime minister has insisted that the country will not be forced out of the euro and back to the drachma.
Lucas Papademos told CNBC that quitting the eurozone "is really not an option". The unelected leader also claimed that negotiations with Greece's creditors are going well:
Our objective is to complete the two processes and also to fulfill our commitments that have been made in the past … and we are confident that we're going to achieve this.
But, but... talks over the Private Sector Involvement broke up on Friday without agreement, with the banks' negotiators demanding a suspension and admitting that progress was disappointing.
Not according to Papademos, who argues that the 'little pause' in talks (they should restart on Wednesday) doesn't matter, as Greece and its creditors are still hammering out a deal.
Some further reflection is necessary on how to put all the elements together. So as you know, there is a little pause in these discussions. But I'm confident that they will continue and we will reach an agreement that is mutually acceptable in time.
Time, though, is running out. Greece has got to agree a debt reduction deal with its creditors soon, so it can get its next aid tranche by March (when it must repay €14bn of maturing debt).
Papademos may not want to go back to the drachma – but if the PSI talks go sour, he may not have a choice....
and....
The amount of money being stashed overnight with the European Central Bank has hit yet another record high this morning – and is approaching half a trillion euros.
The ECB reported this morning that it accepted€493.2bn in overnight deposits from European banks on Friday evening. The amount being borrowed through its overnight loan facility also increased, to €2.38bn (from almost €1.5bn).
The overnight deposits figure has been hitting record levels in recent weeks, ever since the ECB pumped almost €500bn of cheap loans into the system. So what does this mean?
Some analysts say it is a clear sign of stress in the financial sector – with banks choosing to leave their assets with the ECB at a very low rate of return rather than lending them.
ECB head Mario Draghi has rubbished suggestions that the ECB's plans have backfired. Last week, he insisted that the banks who took advantage of the cheap loan splurge are "by and large" not the same banks who are now depositing their funds with the ECB overnight.
Either way, €493.2bn is a lot of money to be switching between commercial banks and the ECB's electronic vault.
and....
Germany's finance minister took to the airwaves this morning to insist that Europe's bailout fund will not be thwarted by S&P.
Wolfgang Schäuble told German radio channel Deutschlandfunk that Germany will not be forced to increase its guarantees to the European Financial Stability Facility (EFSF), to make up for France's downgrade.
Schäuble insisted that Germany's current pledge of €211bn will be quite sufficient, because:
The heads of government and states have decided to get the ...permanent European Stability Mechanism (ESM) to supercede the EFSF already this year...For the job that the EFSF has in coming months, the sum of guarantees is easily sufficient.
S&P stated on Friday night that the EFSF could still keep its own AAA rating if other countries increased their guarantees to make up for France's loss of firepower [France and Germany are the two major backers of the EFSF, which raises funds for countries frozen out of the markets].
Schäuble appears to be suggesting that Germany won't cough up – so an EFSF downgrade could soon follow.....
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