By Johanna Treeck
WASHINGTON (MNI) – The European Central Bank will not apply
different collateral standards to different banks, European Central Bank
Governing Council member Ewald Nowotny told Market News International on
Saturday.
“Collateral rules are general rules; they will certainly not be
made for individual banks,” Nowotny said on the sidelines of the
International Monetary Fund and World Bank meetings.
Nowotny said that the problem of individual banks in the Eurozone
still addicted to ECB financing cannot be primarily addressed by the
central bank.
“There are a small number of banks that still have difficulties
refinancing on markets. The solution for this problem is primarily the
responsibility of governments of the institutions in questions,” Nowotny
said.
On Saturday the ECB released new provisions for implementation of
monetary policy which enhance its possibility to restrict banks’ access
to central bank funding.
While the ECB already had the possibility to reject loans
considered too risky, the revisions to the General Documentation make
explicit that it can “suspend, limit or exclude counterparties’ access
to monetary policy instruments on the grounds of prudence.” It can also
cap the use of assets submitted as collateral by specific banks.
Nowotny’s comments suggest that the revisions may be largely of
technical nature and do not signal an immediate intention to address the
problem of addicted banks by limiting liquidity access via more
restrictive, tailor-made collateral rules.
The head of the Austrian National Bank also said that “the largest
share of banks in the Eurozone are in good condition, which is also
reflected in the decline of the overall use of ECB liquidity
facilities.”
— Frankfurt bureau: +49-69-720 142. Email: jtreeck@marketnews.com —
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