15 October 2008

ECB measures to expand collateral framework and enhance liquidity

The ECB decided to temporarily expand the list of assets eligible as collateral. The provision of longer-term refinancing will also be enhanced, and US dollar liquidity will also be offered through foreign exchange swaps.

The ECB decided to expand the list of assets eligible as collateral in Eurosystem credit operations until the end of 2009. The provision of longer-term refinancing by the Eurosystem will also be enhanced and US dollar liquidity will also be offered through foreign exchange swaps.

 

The Eurosystem will add the following instruments to the list of assets eligible as collateral in its credit operations:

• Marketable debt instruments denominated in other currencies than the euro, namely the US dollar, the British pound and the Japanese yen, and issued in the euro area. These instruments will be subject to a uniform haircut add-on of 8%.
• Euro-denominated syndicated credit claims governed by UK law.
• Debt instruments issued by credit institutions, which are traded on the accepted non-regulated markets that are mentioned on the ECB website; this measure implies inter alia that certificates of deposits (CDs) will also be eligible when traded on one of these accepted non-regulated markets. All debt instruments issued by credit institutions, which are traded on the accepted non-regulated markets, will be subject to a 5% haircut add-on.
• Subordinated debt instruments when they are protected by an acceptable guarantee as specified in section 6.3.2 of the General Documentation on Eurosystem monetary policy instruments and procedures. These instruments will be subject to a haircut add-on of 10%, with a further 5% valuation markdown in case of theoretical valuation.

 

Furthermore, the Eurosystem will lower the credit threshold for marketable and non-marketable assets from A- to BBB-, with the exception of asset-backed securities (ABS), and impose a haircut add-on of 5% on all assets rated BBB-.

 

The date of entry into effect as well as further technical details on these measures will be communicated as soon as possible. The measures will remain in force until the end of 2009.

 

Moreover, as of 20 October 2008 and at least until the end of the first maintenance period in 2009 on 20 January, fixed term deposits held with the Eurosystem will be eligible collateral for Eurosystem credit operations.

 

Consistently with the temporary expansion of the collateral pool, the Eurosystem will also enhance its provision of longer-term refinancing.

 

Press release

Technical specifications (as of 17 Oct)

 

© ECB - European Central Bank