New version of “The implementation of monetary policy in the euro area: General documentation on Eurosystem monetary policy instruments and procedures”

21 February 2005

The European Central Bank (ECB) is today publishing a revised version of the document entitled “The implementation of monetary policy in the euro area: General documentation on Eurosystem monetary policy instruments and procedures” (generally referred to as the “General Documentation”). The new version is an annex to Guideline ECB/2005/2 amending Guideline ECB/2000/7 on monetary policy instruments and procedures of the Eurosystem. The amending Guideline has been adopted by the ECB’s Governing Council. The amendments will apply from 30 May 2005 when the new version of the General Documentation replaces the previous version published in February 2004. The amendments include all changes to the Eurosystem’s operational framework for monetary policy endorsed by the Governing Council since February 2004. These changes mainly relate to the rules for eligible assets and are linked to the introduction in the Eurosystem monetary policy framework of the first phase of the “single list of collateral”. Other amendments concern the definition of close links and guarantors in counterparty relationships, the increase by 30 minutes of the timeframe for quick tenders and the updating of legal references.

The changes relating to the introduction of the single list of collateral consist of the following four measures:

  1. the introduction into the tier one list of eligible assets of a new category of previously ineligible collateral, namely euro-denominated debt instruments issued by entities established in those G10 countries that are not part of the European Economic Area (EEA);
  2. the implementation of the principles used by the Eurosystem to assess the acceptability of non‑regulated markets in order for the Eurosystem to perform its collateral management function;
  3. the relaxation of the criterion for tier one assets requiring every debt instrument issued by a credit institution to be awarded an “issue” or “programme” rating (by a rating agency); an “issuer” rating will be sufficient; and
  4. the withdrawal of equities (as of 30 April 2005) from the tier two lists of eligible assets of central banks that currently list equities as eligible collateral for Eurosystem credit operations.

As a result of the first measure, certain euro-denominated debt instruments that are issued by entities established in Canada, Japan, Switzerland and the United States will be included on the list of eligible assets. The Eurosystem will examine the legal regime applicable to the issuers of such debt instruments to ensure adequate protection of the Eurosystem’s rights. If a counterparty wishes to use debt instruments that are not on the list of eligible assets, it should contact its national central bank (NCB) for guidance on the procedures for their possible inclusion. Soon after 30 May the ECB will announce the exact date of the introduction of the first non-EEA G10 euro-denominated debt instruments onto the list of eligible assets.

With regard to the second measure on the acceptability of non-regulated markets, a preliminary list of accepted non-regulated markets was published by the ECB on 10 May 2004 (see the press release “Review of the Eurosystem’s Collateral Framework: First step towards a Single List”). A final list will be published on 30 May 2005. This list will subsequently be reassessed at least annually. The following will apply:

  • Assets listed, quoted or traded on an accepted non-regulated market will be immediately eligible.
  • Assets listed, quoted or traded only on non-regulated markets that are currently accepted but will not be accepted as of 30 May 2005 will continue to remain acceptable until May 2007, after which any assets exchanged only on markets that are still non-acceptable will become ineligible.

The new version of the General Documentation is available on the ECB’s website in all the official Community languages from today. Hard copies of the printed version will be available free of charge as of 25 March 2005 and can be ordered from the ECB’s Press and Information Division. It will also be distributed by the euro area NCBs.

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