LUXEMBOURG (MNI) – The ECB is currently in the process of reviewing
its collateral rules in light of financial market developments and the
influence a handful of rating agencies could have on EMU member states’
access to central bank credit, Governing Council member Yves Mersch said
Thursday.
“The risk management of the collateral framework has to be examined
in view of developments in financial markets,” the governor of the
central bank of Luxembourg said after presenting the bank’s annual
report.
The ECB has already taken action concerning securitization, ABS and
haircuts, Mersch reminded. “We are in an ongoing process of assessing
our collateral framework and one should distinguish the phasing-out of
some unconventional measures with the re-evaluation of the existing
collateral framework.”
“There are other elements of our collateral framework that will
have to be revised in order to avoid certain unwelcome developments
which might be given in the framework which is exclusively dependent on
rating agencies,” he said.
Mersch’s remarks come after ECB President Jean-Claude Trichet
announced earlier Thursday that the bank would extend into next year its
more lenient crisis-induced collateral rules under which the minimum
rating for a security to be eligible as collateral is BBB-, compared to
A- before the crisis.
He also said the central bank would introduce “graded” haircuts on
collateral to take account of the ones with poorer ratings.
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