Financial Stability News

Flashing news about financial stability and central banking

ECB’s heavy haircuts

FT Alphaville gives further details today on the regional variations in collateral requirements for the upcoming LTRO . As noted by Draghi yesterday, ECB will apply a hefty haircut of 2/3 on all pledged collateral. But national central banks have discretion within the new collateral rules to accept local assets depending on circumstances. Generally, the new guidelines imply that NCB’s will accept assets with ratings down to BB- instead of previously BBB-. But there are variations between NCBs as noted in this report, e.g. CB of Spain will accept mortgages, while the Irish CB will not.

The Germans think the ECB is giving away “easy money”. That can be debated, with such a heavy haircut.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: