(1)

In accordance with Article 18.1 of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), the European Central Bank (ECB) and the national central banks of the Member States whose currency is the euro (hereinafter the ‘NCBs’) may, in order to achieve the objectives of the European System of Central Banks, conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral. The general conditions under which the ECB and the NCBs stand ready to enter into credit operations, including the criteria determining the eligibility of collateral for the purposes of Eurosystem credit operations, are laid down in Guideline (EU) 2015/510 of the European Central Bank (ECB/2014/60) (1).

(2)

Coronavirus disease 2019 (COVID-19) has been characterised by the World Health Organization as a pandemic and is the cause of a collective public health emergency which is unprecedented in recent history. It has produced an extreme economic shock that requires an ambitious, coordinated and urgent reaction on all policy fronts to support businesses and workers at risk. As a consequence of the pandemic, economic activity across the euro area is declining and will inevitably suffer a considerable contraction, especially as more countries are faced with the need to intensify containment measures. These measures place acute strains on the cash-flows of businesses and workers and put the survival of businesses and jobs at risk. It is also clear that this situation hampers the transmission of the monetary policy impulses and adds severe downside risks to the relevant inflation outlook.

(3)

On 7 April 2020, the Governing Council adopted a set of decisions in response to the coronavirus pandemic, which could jeopardise the objective of price stability and the proper functioning of the monetary policy transmission mechanism. These include collateral easing measures to facilitate Eurosystem counterparties in maintaining and mobilising sufficient collateral in order to be able to participate in Eurosystem liquidity-providing operations. Accordingly, participation in these operations will be based on amended collateral eligibility criteria and risk control measures. These measures are proportionate to counter the serious risks to price stability, the monetary policy transmission mechanism and the economic outlook in the euro area posed by the outbreak and escalating diffusion of COVID-19.

(4)

With a view to mitigating the adverse impact on collateral availability of potential severe rating downgrades resulting from the COVID-19 outbreak, the Governing Council considers that the Eurosystem may temporarily increase its risks tolerance in order to support counterparties’ access to liquidity and, thereby, to also support the provision of credit to the euro area economy, including by reducing the valuation haircuts applied to certain collateral assets.

(5)

The Governing Council also assessed: (a) the need to alleviate pressures stemming from the COVID-19 outbreak which have severely affected the Greek financial markets; (b) the commitments undertaken by the Hellenic Republic in the context of the enhanced surveillance under Regulation (EU) No 472/2013 of the European Parliament and of the Council (2) and the monitoring of the implementation thereof by Union institutions; (c) the fact that medium-term debt relief measures for the Hellenic Republic delivered via the European Stability Mechanism depend on the continued implementation of these commitments; (d) the information available to the ECB regarding the economic and financial situation of the Hellenic Republic as a result of the involvement of the ECB in the enhanced surveillance framework; and (e) the fact that the Hellenic Republic had regained market access. The Governing Council also assessed the need to reduce fragmentation of collateral accepted for Eurosystem credit operations with a view to enhancing the smooth functioning of the monetary policy transmission mechanism. Based on these assessments, the Governing Council considers that NCBs should be allowed to accept as eligible collateral for the purposes of Eurosystem credit operations marketable debt securities issued by the central government of the Hellenic Republic that do not satisfy the Eurosystem’s credit quality requirements but fulfil all other eligibility criteria applicable to marketable assets, subject to a specific haircut schedule.

(6)

The additional measures set out in the amendments introduced under this Guideline should apply temporarily and the Governing Council should re-assess the need for extending any of these temporary measures before the end of the year to ensure an appropriate monetary policy transmission mechanism. In doing so, the Governing Council will also take into account the need of Eurosystem counterparties that are, or will be, participating in targeted longer-term refinancing operations conducted under Decision (EU) 2019/1311 of the European Central Bank (ECB/2019/21) (3) to maintain collateral availability for the entire duration of these operations.

(7)

To react promptly to the current pandemic situation, this Guideline should be notified to the NCBs as soon as possible after adoption.

(8)

Therefore Guideline ECB/2014/31 (4) should be amended accordingly,