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23.11.2009

Tightenting of eligibility rules for ECB tenders

In what is seen as a further indicator to extraordinary governmental and supra-governmental support for bank liquidity is being unwound, the ECB announced higher ratings standards for asset backed paper eligible for collateral with the ECB.

On their website on Friday they posted a Press Release including the following quote

"The Eurosystem will require at least two ratings from an accepted external credit assessment institution for all ABSs issued as of 1 March 2010. In determining the eligibility of these ABSs, the Eurosystem will apply the “second-best” rule, meaning that not only the best, but also the second-best available rating must comply with the minimum threshold applicable to ABSs (see the press release of 20 January 2009)."

Using the advanced technical guidance issued by Robert Fiedler and his methodology team, CBC techniques increasingly need flexible rules in determining the eligibility criteria of assets used in Central Bank operations - especially for firms who run global liquidity operations.

For more information on CBC, please contact niul.dillonhatcher@pelican-consulting.co.uk

 

Ian

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