Collateral for monetary policy loans

All Eurosystem monetary policy loans and intraday credit must be secured by eligible collateral. The Eurosystem accepts a wide range of financial assets as collateral, although they must satisfy the eligibility criteria.

Eligible collateral consists of two types of financial assets: marketable and non-marketable. Marketable assets consist of debt securities listed on the ECB website. There is no predetermined list of non-marketable assets, which primarily consist of credit claims to eligible debtors. Banks assess credit claims against the eligibility criteria on a case-by-case basis (for more, see section 4 of the General terms and conditions on the implementation of the monetary policy framework).

To ensure that financial assets meet the high credit standards the Eurosystem Credit Assessment Framework (ECAF), which sets out procedures and rules for minimum credit assessments, was established. Under these rules, for an individual financial asset banks may assess the credit quality of the debtor by external credit assessment institutions, NCBs’ in-house credit assessment systems, banks’ internal ratings-based systems, and third-party providers’ tools. Accordingly banks may also use the ICAS, the Bank of Slovenia’s in-house credit assessment system. For more, see the separate section.

The Bank of Slovenia uses the pool of eligible collateral at the Bank of Slovenia as collateral for Eurosystem loans. The pool of eligible collateral is the total value of the financial assets that an individual bank holds as collateral with the Bank of Slovenia. This means that an individual financial asset is not earmarked to a specific loan, but is pledged as collateral for any loan that the bank draws down.

Banks established in Slovenia may use eligible collateral issued in Slovenia or in another country as collateral for monetary policy loans and intraday credit. When using foreign collateral, banks use the correspondent central banking model (CCBM) to transfer assets to the Bank of Slovenia.