On Nov. 21, FR CB will end the collateral crisis mechanism.
FR CB will end the crisis mechanism for accepting additional private claims as guarantees for monetary policy operations except for loans guaranteed by the State.
Purpose
In Dec. 2011, the Eurosystem set up a temporary collateral framework, extended during the COVID crisis; it allowed FR CB to accept additional private claims (ACC).
Of harmonised credit quality levels 4 and 5 and therefore not investment grade.
French banks have not been led to significantly mobilize this additional collateral, particularly given the scale of the standard collateral available elsewhere.
FR CB decided to end the temporary crisis framework for the acceptance of additional private claims (ACC), with the unique exception of loans guaranteed by the State.
Because of the normalization of monetary policy and the end of the COVID crisis.
After the mechanism's end, only government-guaranteed loans granted before Jun. 30, 2022 will be accepted as collateral under the ACC; business loans will be ineligible.
This concerns loans with a credit quality of CQS4/CQS5, dollar-denominated loans.
Export loans insured or guaranteed by Bpifrance Assurance Export and loans that relate to rental transactions without a purchase option; no effect on banks' refinancing.
Effectiveness
The decision to end the mechanism takes effect on Dec. 16, 2024.
Regulators
FR CB
Entity Types
Bank
Reference
PR, 11/21/2024
Functions
Actuarial and Valuation; Compliance; Financial; Risk; Treasury
