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The more banks pledge collateral to draw on long-term ECB financing, the less attractive it is for investors to buy banks' unsecured bonds, as they will be further behind in the queue in the case of bankruptcy.
According to the Greek newspaper Kathimerini, the interest rate is 1.55%, compared with 0.05% on regular ECB financing.
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Jens Weidmann, president of Germany's Bundesbank, says intervening in the bond market comes dangerously close to breaking the law that bans the ECB from financing states.
At the end of last month the Bundestag passed a non-binding resolution against the ECB's financing the euro-zone rescue fund or continuing to buy bonds once the rescue fund can do so instead.
The banks are still in a delicate state with many dependent on the European Central Bank (ECB) for finance.
In order to qualify for €10bn promised by the International Monetary Fund (IMF), the European Central Bank (ECB) and eurozone finance ministers, Cyprus had to approve yesterday's plan.
The ECB would indirectly finance governments when it may only manage the money supply, ruled the German constitutional court in February (though it referred the issue up to the European Court of Justice).Buying asset-backed securities from banks is, by this logic, another step in the wrong direction.
In a scathing speech which was broadcast on national TV, Tsipras laid the blame on the Eurogroup, a meeting of the eurozone finance ministers, and ECB claiming: '"It is clear that the objective of the ECB and Eurogroup's decision is to impose blackmail on the will of the Greek people".
Outright monetary transactions mechanism (OMT), enabling unlimited purchase of government debt, is close enough to monetary financing to compromise ECB's independence.
The Germans poured some cold water over ECB speculation early on when finance minister Schaeuble commented that Draghi's Jackson Hole speech was "over interpreted".
The EU, IMF and European Central Bank (ECB) are studying Greece's finances before deciding whether to hand over 31.5bn euros ($38bn £24.5bnn).
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com