ECB phases out crisis-era measures for Eurosystem collateral framework
02 December 2024 EU
Image: nmann77/stock.adobe.com
The Governing Council of the European Central Bank (ECB) has decided on measures to enhance the harmonisation, flexibility, and risk efficiency of the Eurosystem collateral framework.
In order to support a return to a single, harmonised collateral list for all counterparties within the euro area, the ECB will phase out temporary collateral easing measures introduced during the global financial crisis.
This includes eased eligibility criteria for credit claims backed by public guarantees.
Certain temporary asset types, such as retail mortgage-backed debt instruments and credit claims below credit quality step 3, will no longer qualify as eligible collateral.
However, the Governing Council also decided to accept certain temporary asset types as collateral under the general framework.
Asset-backed securities rated at credit quality step 3, alongside marketable assets denominated in US dollar, pounds sterling, and Japanese yen, will now be on the list.
In its statement, the ECB says: “These changes, together with the broad collateral framework for refinancing operations conducted through fixed rate tender procedures with full allotment, will help ensure the ECB’s policy implementation remains effective, robust, flexible, and efficient in the future, in line with the revised operational framework for implementing monetary policy.”
Pools of non-financial corporate credit claims will continue to be accepted as eligible collateral under the temporary framework until at least the end of 2026, and the same applies to credit claims benefiting from a Covid-19-related public sector guarantee.
All the other changes will enter into force with the next regular update of the legal framework, but no earlier than Q4 2025.
National central banks will provide further guidance to affected counterparties.
In order to support a return to a single, harmonised collateral list for all counterparties within the euro area, the ECB will phase out temporary collateral easing measures introduced during the global financial crisis.
This includes eased eligibility criteria for credit claims backed by public guarantees.
Certain temporary asset types, such as retail mortgage-backed debt instruments and credit claims below credit quality step 3, will no longer qualify as eligible collateral.
However, the Governing Council also decided to accept certain temporary asset types as collateral under the general framework.
Asset-backed securities rated at credit quality step 3, alongside marketable assets denominated in US dollar, pounds sterling, and Japanese yen, will now be on the list.
In its statement, the ECB says: “These changes, together with the broad collateral framework for refinancing operations conducted through fixed rate tender procedures with full allotment, will help ensure the ECB’s policy implementation remains effective, robust, flexible, and efficient in the future, in line with the revised operational framework for implementing monetary policy.”
Pools of non-financial corporate credit claims will continue to be accepted as eligible collateral under the temporary framework until at least the end of 2026, and the same applies to credit claims benefiting from a Covid-19-related public sector guarantee.
All the other changes will enter into force with the next regular update of the legal framework, but no earlier than Q4 2025.
National central banks will provide further guidance to affected counterparties.
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