By Jonathan Davies

The European Central Bank (ECB) has toughened its stance on Greece by restricting finance to its banks.

The ECB said it will no longer accept government bonds as collateral for lending money to commercial banks. It means that it will be more expensive for Greek banks to access cash.

The move comes as the ECB said it could not assume that negotiations over Greece's €240bn (£179bn) bailout debt would be "successful".

Greece's new finance minister Yanis Varoufakis, who has been touring Europe for talks with key European counterparts like George Osborne, said the suspension, which comes into effect on 11 February, would have "no adverse impact" on Greece's financial sector.

Commercial banks can still use the Emergency Liquidity Assistance (ELA) programme which is run by the Greek central bank, but it will cost much more. Interest rates with the ELA are at 1.55%, compared with the ECB's 0.05%.

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