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    ECB Amends Guideline on Temporary Collateral Easing Measures

    June 17, 2021

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral. The amendment extends the application period of certain collateral easing measures until July 30, 2022. These measures were introduced in April 2020, in response to the COVID-19 pandemic. Guideline 2021/975 shall take effect on the day of its notification to national central banks of the member states whose currency is the euro. The Eurosystem central banks shall comply with the guideline from September 30, 2021.

    The Governing Council of ECB had adopted certain collateral easing measures by amending Guideline ECB/2014/31 on April 07, 2020 and April 22, 2020. The additional measures set out in the amendments introduced on April 07, 2020 applied temporarily and no end date was specified, with the rationale that the measures could be revoked at any given time. The amendments introduced on April 22, 2020 remain in effect until September 29, 2021, as the Governing Council considered that they should apply until the first early repayment date under the third series of targeted longer-term refinancing operations (TLTRO-III) applicable at that time.

    On December 10, 2020, the Governing Council had decided to adopt additional monetary policy measures with the aim of contributing to preserving favorable financing conditions over the pandemic period. As part of these measures, the Governing Council decided that the collateral easing measures adopted on April 07, 2020 and April 22, 2020 should apply until June 30, 2022. Therefore, certain provisions of Guideline ECB/2014/31 related to collateral easing measures shall remain in effect until July 30, 2022. This will ensure that banks can continue to make full use of the liquidity operations of Eurosystem, most notably TLTRO-III. In addition. Annexes IIa and IIb of the Guideline ECB/2014/31 have been replaced by Annexes I and II of the Guideline 2021/975, respectively. The Annexes are related to valuation haircut levels applied to asset-backed securities and marketable assets. The Governing Council plans to reassess these collateral easing measures before June 2022. 

     

    Related Link: Guideline 2021/975

     

    Keywords: Europe, EU, Banking, Securities, COVID-19, Credit Risk, TLTRO III, Collateral Framework, Haircut, Deadline Extension, Counterparty Risk, ECB

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