The correspondent central banking model (CCBM) was introduced by the Eurosystem together with the euro in January 1999. Its main purpose is to ensure that all marketable and non- marketable assets eligible for use in monetary policy operations or to obtain intraday credit in TARGET2 are made available to all Eurosystem counterparties, regardless of where the assets or the counterparty are situated.
Links between securities settlement systems (SSSs) in various countries have been established for some time. Insofar as the ECB’s Governing Council has deemed such links eligible for use in Eurosystem credit operations, they represent a valid alternative to the CCBM. It is also possible for Eurosystem counterparties to use eligible links in combination with the CCBM for the purposes of Eurosystem credit operations. Triparty collateral management services offered by eligible triparty agents (TPAs) on a cross-border basis are supported via the CCBM, subject to the respective TPAs having been approved as eligible for use in Eurosystem credit operations.
In the case of mobilising marketable assets via the CCBM, counterparties must make arrangements to mobilise these assets with one of the following:
The collateral will then be made available to the central bank of the country where the respective SSS/TPA is located (i.e. the correspondent central bank - CCB), and it will hold the collateral on behalf of the central bank granting the credit (i.e. the home central bank - HCB).
In the case of non-marketable assets , such as credit claims and non-marketable retail mortgage-backed debt instruments (RMBDs), which are not governed by domestic law, specific CCBM solutions have been implemented for their mobilisation. These specific assets can be used through the CCBM using a transfer/assignment/pledge or floating charge on behalf of and in the name of the home central bank. A specific variant has been implemented to allow the cross-border use of Irish Mortgage-Backed Promissory Notes (MBPNs).
The CCBM is also available to counterparties of Danmarks Nationalbank, Sveriges Riksbank and the Bank of England.
More information can be found here:
In principle, the use of the CCBM does not require counterparties to adopt special procedures beyond arranging the transfer of the securities in a different country. But counterparties should be aware that market practices in other countries may be different to those in their own country.
Different types of collateralisation techniques (repos, assignments, pledges and floating charges) and different methods of holding collateral (pooled and earmarked collateral systems) are used in the EU. Moreover, securities settlement systems (SSSs) in the EU have different operating procedures that the counterparty must take into account when transferring collateral held in a different country.
See below for an overview of information related to the CCBM in each country. This information is not intended to be exhaustive, and should be read together with the publication Correspondent central banking model (CCBM) - procedures for Eurosystem counterparties.
For further details, consult:
|Market practices by country|
Custodian banks play an important role in the CCBM processing chain when delivering marketable assets to the CCB on behalf of the counterparty.
The major European credit sector associations (the European Banking Federation, the European Savings Banks Group and the European Association of Co-operative Banks) have established "best practices" for custodian banks involved in CCBM transactions. They provide market participants with guidelines for optimising the efficiency of the CCBM. The guidelines include time benchmarks, clear input deadlines and communication channels.
The following are best practices for market participants involved in CCBM operations as agreed by the European Banking Federation, the European Savings Banks Group and the European Association of Co-operative Banks:
Eligible non-marketable assets for Eurosystem credit operations comprise of credit claims and Irish mortgage-backed promissory notes. Due to their specific characteristics, these assets cannot be transferred through an SSS hence distinct CCBM procedures have been set up for their use on a cross-border basis.
In the case of credit claims, when the jurisdiction of the law governing a credit claim and that of the NCB of the counterparty (i.e. the HCB) do not coincide, the credit claim can be mobilised via the NCB of the jurisdiction of the law governing the credit claim (which acts as the CCB) on the basis of a transfer, pledge, assignment or floating charges on behalf of and in the name of the HCB.
Counterparties should follow the handling procedures and legal requirements as specified in the terms and conditions stipulated by each NCB acting as a CCB.
For details, see
A specific variant of the CCBM has been introduced for Irish mortgage-backed promissory notes.
For details see the following publications:
Counterparties who make use of marketable and non-marketable assets as collateral in Eurosystem credit operations on a cross-border basis (excluding triparty services) via the CCBM must pay a transaction fee of €30 for each delivery of assets to their HCB. In addition, a combined custody and administration fee of 0.0069% per annum is charged on the nominal value of the assets held each month.
When triparty services are being used via the CCBM, counterparties must pay a transaction fee of €30 for each processed instruction initiated by them, and a monthly service fee of €50 per TPA used.
Taxes are not included in these fees. HCBs may also charge local fees.
Further information on the procedures for fee collection is provided by NCBs in the domestic legal documentation governing monetary policy and intraday credit operations.