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PRESS RELEASE

ECB refines the framework for the implementation of monetary policy in the euro area

16 December 2010

The Governing Council of the European Central Bank (ECB) has adopted Guideline ECB/2010/30, amending Guideline ECB/2000/7 on monetary policy instruments and procedures of the Eurosystem. Guideline ECB/2000/7 sets out the principles, instruments, procedures and criteria for the implementation of the single monetary policy in the euro area and contains two annexes:

  • Annex I, entitled “The implementation of monetary policy in the euro area: General documentation on Eurosystem monetary policy instruments and procedures”, (usually referred to as the “General Documentation”);
  • Annex II, entitled “Additional minimum common features”, containing the features applicable to all contractual and regulatory arrangements for monetary policy operations.

The amendments introduced by Guideline ECB/2010/30 concern Annex I (i.e. the General Documentation) and relate, in particular, to the following two aspects:

  1. Fixed-term deposits: the addition of fixed-term deposits from eligible counterparties with the Eurosystem to the list of assets eligible as collateral for Eurosystem operations. These fixed-term deposits will not be subject to any valuation haircut.
  2. Close links: the introduction of additional exemptions from the “close link prohibition” relating to non-UCITS-compliant covered bank bonds that (i) fulfil all criteria applicable to asset-backed securities, (ii) are backed by commercial mortgage loans, and (iii) are denominated in euro.

The General Documentation has also been updated in light of Eesti Pank becoming a member of the Eurosystem and for the recent change of name of Ireland’s central bank.

The new provision on fixed-term deposits will apply as of 1 January 2011 while the new provisions on the exemptions from the close link prohibition will apply as of 1 February 2011.

The Governing Council amends Guideline ECB/2000/7 on a regular basis in order to capture, in a single legal act, the relevant decisions on monetary policy instruments and procedures taken in the course of the previous months. The guidelines can be found on the ECB’s website.

A consolidated version of the General Documentation will be published in February 2011.

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