Review of the Eurosystem’s collateral framework: second step towards a single list

In June 2003 the European Central Bank (ECB) launched a public consultation to gather the views of market participants on measures to improve the collateral framework of the Eurosystem. Following the positive response to this initiative, the Governing Council of the ECB approved the gradual introduction of a “Single List” in the collateral framework of the Eurosystem (see Press Release of 10 May 2004) to replace the current two-tier system of eligible collateral. The ECB also announced that, as a first step, it intended to introduce in its collateral framework a new category of previously ineligible assets (euro-denominated debt instruments issued by entities established in those Group of Ten countries that are not part of the European Economic Area).

As a second step, the Governing Council has approved in principle the inclusion in the Single List of bank loans from all euro area countries. The exact modalities and timing for the eligibility of bank loans will be communicated in due course once the outstanding implementation issues have been settled.

The Governing Council has also decided that non-marketable retail mortgage-backed debt instruments, which currently only include Irish mortgage-backed promissory notes, shall be included in the Single List.

Finally, the Governing Council has also decided that equities, which are currently eligible as tier two collateral in Spain, the Netherlands and Portugal, shall not be included in the Single List. These assets will therefore be phased out from eligibility according to a specific timetable, to be communicated in due course.