The European Central Bank (ECB) is making contingency plans for both an "orderly" and "disorderly" default by Greece, sources told CNBC Tuesday, as the country's borrowing costs soar and Greece edges closer to bankruptcy.
ECB staff have put together a proposal to increase the haircuts on Greek bank collateral that is offered in exchange for Emergency Liquidity Assistance (ELA) from the Bank of Greece, sources with knowledge of the situation, who have asked to remain anonymous because of the sensitivity of the situation, told CNBC.
The proposal has not yet been discussed by the Governing Council, however. The ECB declined to comment when contacted by CNBC.
On Tuesday, the yield on benchmark ten-year bonds rose mid-morning to 13.619 percent, up from 13.334 percent at the open. Shares of the National Bank of Greece extended losses from Monday and was trading down 8.2 percent. Piraeus Bank, meanwhile, was trading down 11.2 percent and Alpha bank down 3.8 percent.