ECB announces changes to collateral rules
February 14, 2018

The European Central Bank has published a series of amendments relating to the implementation of the Eurosystem's monetary policy. These include the implementation of changes to the eligibility criteria of unsecured bank bonds, a decision which was announced on December 14 2017.

The Eurosystem is to exclude investment funds as eligible issuers and guarantors for the collateralization of Eurosystem credit operations, taking into account their specific risks related to potential asset portfolio changes.

The Eurosystem is also to exclude commercial mortgage-backed securities (CMBSs) from collateral eligibility, on account of their relatively complex nature.

The Eurosystem is changing the rules on the own-use of assets in the collateral framework (own-use in this context refers to banks using as collateral financial instruments issued in their own name). Covered bonds that do not meet certain requirements for preferential risk weights will no longer be allowed for own-use. The own-use of covered bonds meeting the requirements of the CRR and the own-use of non-marketable retail mortgage-backed debt instruments, or RMBDs, as well as of certain multi-cédulas (debt instruments issued by specific Spanish special purpose vehicles) will continue to be allowed.

The Eurosystem is changing the limit on the use of unsecured bank bonds as collateral. In short, unsecured bank bonds that are subject to some form of subordination will become ineligible. Assets issued by credit institutions that are also recognized agencies in the collateral framework, or multilateral development banks or international organisations will be exempted from the limit.

Other guidelines issued today include details of changes to haircuts for floating rate assets and risk control measures for retained covered bonds with extendible maturities and amendments to criteria on interest payment structures for eligible credit claims and other technical changes related to collateral framework.





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The European Central Bank has published a series of amendments relating to the implementation of the Eurosystem's monetary policy. These include the implementation of changes to the eligibility criteria of unsecured bank bonds, a decision which was announced on December 14 2017.

The Eurosystem is to exclude investment funds as eligible issuers and guarantors for the collateralization of Eurosystem credit operations, taking into account their specific risks related to potential asset portfolio changes.

The Eurosystem is also to exclude commercial mortgage-backed securities (CMBSs) from collateral eligibility, on account of their relatively complex nature.

The Eurosystem is changing the rules on the own-use of assets in the collateral framework (own-use in this context refers to banks using as collateral financial instruments issued in their own name). Covered bonds that do not meet certain requirements for preferential risk weights will no longer be allowed for own-use. The own-use of covered bonds meeting the requirements of the CRR and the own-use of non-marketable retail mortgage-backed debt instruments, or RMBDs, as well as of certain multi-cédulas (debt instruments issued by specific Spanish special purpose vehicles) will continue to be allowed.

The Eurosystem is changing the limit on the use of unsecured bank bonds as collateral. In short, unsecured bank bonds that are subject to some form of subordination will become ineligible. Assets issued by credit institutions that are also recognized agencies in the collateral framework, or multilateral development banks or international organisations will be exempted from the limit.

Other guidelines issued today include details of changes to haircuts for floating rate assets and risk control measures for retained covered bonds with extendible maturities and amendments to criteria on interest payment structures for eligible credit claims and other technical changes related to collateral framework.



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