MNI BRIEF: ECB To Restore Collateral Rules, Bar For Greek Debt

The European Central Bank will phase out collateral easing measures in place since April 2020, but will continue to accept Greek government bonds as collateral for at least as long as it reinvests under its pandemic emergency purchase programme, it said on Thursday.

From July 8, it will halve the reduction in collateral valuation haircuts to 10%, and will no longer accept securities whose ratings fell below limits after April 2020. It will restore the limit with respect to unsecured debt instruments issued by any single other banking group in a credit institution’s collateral pool from 10% to 2.5%, and phase out the easing of requirements for the eligibility of additional credit claims, it said in a news release.

In June 2023 the ECB expects to implement a new valuation haircut schedule based on its pre-pandemic risk tolerance level for credit operations, phasing out the remaining general 10% reduction in collateral valuation haircuts, and in March 2024 it will in principle phase out remaining pandemic collateral easing measures, taking into account collateral needs for continued participation in the outstanding TLTRO III operations until December 2024.