Decision No 2022-03 of 30 June 2022 amending Decision No 2015-01 of 22 April 2015 on the implementation of the monetary policy and intraday credit of the Bank of France

Decision No 2022-03 of 30 June 2022 amending Decision No 2015-01 of 22 April 2015 on the implementation of the monetary policy and intraday credit of the Bank of France

THE GOVERNOR OF THE BANK OF FRANCE

Having regard to:

• the Treaty on the Functioning of the European Union, and in particular Article 127(1) and Article 127(2), first indent,
• the Statute of the European System of Central Banks and of the European Central Bank (ECB), and in particular Articles 3.1, first indent, 12.1, 14.3 and 18.2,
• ECB Guideline (EU) 2015/510 of 19 December 2014 on the implementation of the Eurosystem monetary policy framework (ECB/2014/60), as amended,
• ECB Guideline (EU) 2022/987 of 2 May 2022 amending ECB Guideline (EU) 2015/510 on the implementation of the Eurosystem monetary policy framework (ECB/2022/17),
• the Monetary Agreement between the European Union and the Principality of Monaco of 26 December 2001, as amended on 29 November 2011,
• the Monetary and Financial Code, and in particular Article L. 142-8,
• the Decision of the Governor of the Bank of France No 2015-01 of 22 April 2015 on the implementation of the monetary policy and intraday credit of the Bank of France, as amended,
• the Decision of the Governor of the Bank of France No 2020-02 of 20 April 2020 on additional temporary measures concerning the Bank of France refinancing operations and the eligibility of collateral, as amended.

DECIDES

Article 1

Amendments

The Decision of the Governor of the Bank of France No 2015-01 of 22 April 2015 on the implementation of the monetary policy and intraday credit of the Bank of France (hereinafter "the Decision") is amended as follows:

1. Article 2 is amended as follows:

a) Point 78) is replaced by the following text:
"78) 'bilateral procedure', a procedure whereby the Bank of France or, where applicable, the ECB execute firm operations, either directly with one or more counterparties, or via stock exchanges or market intermediaries, without recourse to tender procedures;"

b) The following point 32 is inserted:
"32) 'ECONS credit', a credit granted under the emergency treatment referred to in Annex II, Appendix IV, paragraph 6, of ECB Guideline ECB/2012/27;"

c) Point 66) is replaced by the following text:
"66) 'Eurosystem credit operations', a) temporary transfer operations intended to provide liquidity, i.e. Eurosystem monetary policy operations providing liquidity, excluding foreign exchange swaps executed for monetary policy purposes and firm purchases; b) intraday credit operations; and c) ECONS credit operations;"

d) Point 18) is replaced by the following text:
"18) 'indicative calendar for regular Eurosystem tender operations', a calendar established by the Eurosystem indicating the dates chosen for the reserve maintenance period, as well as the announcement, tender and maturity of the main refinancing operations and the longer-term refinancing operations;"

e) Point 75) is replaced by the following text:
"75) 'reserve period', see the definition given in Regulation (EU) 2021/378 of the European Central Bank (ECB/2021/1) (); () Regulation (EU) 2021/378 of the European Central Bank of 22 January 2021 on the application of minimum reserve requirements (ECB/2021/1) (OJ L 73, 3.3.2021, p. 1)."

f) Point 74) is replaced by the following text:
"74) 'G10 countries not belonging to the EEA', the G10 member countries that are not EEA countries, namely Canada, Japan, Switzerland, the United Kingdom and the United States;"

g) The following point 52 ter) is inserted:
"52 ter) 'sustainability-linked bond issuer group', a group of companies that operate as a single economic entity and constitute a reporting entity for the purpose of presenting consolidated accounts, comprising the parent company and all its direct and indirect subsidiaries;"

h) Point 60 bis) is replaced by the following text:
"60 bis) 'sustainability-linked performance target' (SLPT), a target set in a public issuance document, measuring the quantified improvements in the sustainability profile of the issuer or one or more companies belonging to the same sustainability-linked bond issuer group over a predefined period compared to one or more environmental objectives defined in Regulation (EU) 2020/852 of the European Parliament and of the Council () or to one or more of the sustainable development goals set by the United Nations in relation to climate change or environmental degradation () () Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13). () Objectives mentioned in the '2030 Agenda for Sustainable Development', adopted by the United Nations General Assembly on 25 September 2015."

2. In Article 3, paragraph 2 is replaced by the following text:
   "2. The minimum reserve requirements are specified in Regulation (EC) No 2531/98 and Regulation (EU) 2021/378 (ECB/2021/1). Some characteristics of the minimum reserve requirements are described in Annex I for information purposes."

3. In Article 4, Table 1 is amended as follows:

a) In the row 'Fine-tuning operations' of the fifth column ('Procedure'), the terms 'Bilateral procedures' and the footnote are deleted;

b) In the row 'Structural operations' of the fifth column ('Procedure'), the following footnote () is inserted after the terms 'Bilateral procedures':
"() The procedures applicable to bilateral firm operations are communicated if necessary."

4. In Article 8, paragraph 2, point c) is replaced by the following text:
   "c) are normally carried out by rapid tender procedures, unless the Eurosystem decides to carry out the particular fine-tuning operation by means of a normal tender procedure taking into account particular monetary policy aspects or in order to react to the market situation;"

5. In Article 10, paragraph 4, point c) is replaced by the following text:
   "c) which fall within the scope of open market operations are executed by means of normal tender procedures, except fine-tuning operations, which are executed by means of tender procedures;"

6. In Article 11, paragraph 5, point c) is replaced by the following text:
   "c) are carried out by rapid tender procedures, unless the Eurosystem decides to carry out the particular operation by means of a normal tender procedure taking into account particular monetary policy aspects or in order to react to the market situation;"

7. In Article 12, paragraph 6, point c) is replaced by the following text:
   "c) are carried out by rapid tender procedures, unless the ECB decides to carry out the particular operation by means of a normal tender procedure taking into account particular monetary policy aspects or in order to react to the market situation;"

8. In Article 14, paragraph 3, point d) is replaced by the following text:
   "d) are executed in a decentralised manner by the Bank of France unless the ECB Governing Council decides that the particular operation is to be carried out by the ECB or one or more NCBs acting on behalf of the ECB;"

9. In Article 17, paragraph 6 is replaced by the following text:
   "6. The ECB Governing Council regularly decides on the interest rates applicable to the standing facilities. The new interest rates apply from the beginning of the new reserve maintenance period, as defined in Article 8 of Regulation (EU) 2021/378 (ECB/2021/1). The ECB publishes a calendar of reserve maintenance periods at least three months before the beginning of each calendar year."

10. Article 19 is amended as follows:

a) Paragraph 2 is replaced by the following text:
"2. Access to the marginal lending facility is limited to TARGET2 business days, excluding days on which TARGET2 is not available at the end of the day due to a 'prolonged disruption of TARGET2 over several business days' as referred to in Article 187 bis. On days when the securities settlement systems are not operational, access to the marginal lending facility is granted based on eligible assets that have already been previously deposited with the Bank of France."

b) Paragraph 6 is replaced by the following text:
"6. At the end of each business day, the existence, after the completion of end-of-day control procedures, of a debit balance on the settlement account of a counterparty opened with the Bank of France is automatically considered as a request for recourse ('automatic request') to the marginal lending facility. In order to meet the requirement provided for in Article 18, paragraph 4, counterparties must have previously deposited sufficient eligible assets as collateral for the operation with the Bank of France, before such an automatic request occurs. Failure to comply with this access condition gives rise to sanctions in accordance with Articles 154 to 157. In the case of a counterparty whose access to Eurosystem monetary policy operations has been limited under Article 158, if an automatic request results in this counterparty exceeding the defined limit, the sanctions provided for in Articles 154 to 157 are applicable with regard to the amount of the limit exceedance."

11. In Article 22, paragraph 1 is replaced by the following text:
"1. Institutions meeting the eligibility criteria set out in Article 55 and having access to an account opened with the NCB where the operation can be settled, including in TARGET2, may access the deposit facility. Access to the deposit facility is limited to TARGET2 business days, excluding days on which TARGET2 is not available at the end of the day due to a 'prolonged disruption of TARGET2 over several business days' as referred to in Article 187 bis."

12. In Part Two, Title III, the title of Chapter 1 is replaced by the following text:
"Tender procedures applicable to Eurosystem open market operations"

13. Article 24 is replaced by the following text:
"Article 24
Types of procedures applicable to open market operations Open market operations are carried out using tender procedures."

14. In Part Two, Title III, Chapter 1, Section 3, comprising Articles 44 to 48, is deleted;

15. In Article 50, paragraph 2, in Table 8, the label 'Settlement date for open market operations carried out by rapid tender procedures or bilateral procedures' is replaced by 'Settlement date for open market operations carried out by rapid tender procedures';

16. Article 52 is replaced by the following text:
"Article 52
Settlement of open market operations carried out by means of rapid tender procedures or bilateral procedures
1. The Eurosystem endeavours to settle on the transaction date open market operations carried out by means of rapid tender procedures. Other settlement dates may apply, in particular for firm operations and foreign exchange swaps.
2. Fine-tuning operations and structural operations carried out by means of firm operations and executed by bilateral procedures are settled in a decentralised manner through the Bank of France."

17. In Article 54, paragraphs 1 and 2 are replaced by the following text:
"1. In accordance with Article 3(1)(b) and (c) of Regulation (EU) 2021/378 (ECB/2021/1), settlement accounts of a counterparty opened in the books of the Bank of France may be used as reserve accounts. Reserve balances on settlement accounts may be used for intraday settlement purposes. The daily reserve holdings of a counterparty are calculated as the sum of the end-of-day balances of its reserve accounts. For the purposes of this Article, 'reserve accounts' has the same meaning as in Regulation (EU) 2021/378 (ECB/2021/1).

2. Reserve balances that meet the minimum reserve requirements under Regulation (EC) No 2531/98 and Regulation (EU) 2021/378 (ECB/2021/1) are remunerated in accordance with Regulation (EU) 2021/378 (ECB/2021/1)."

18. In Article 55, point a) is replaced by the following text:
"a) they are subject to the Eurosystem minimum reserve regime under Article 19.1 of the Statute of the ESCB and are not exempt from their obligations under the minimum reserve regime under Regulation (EC) No 2531/98 and Regulation (EU) 2021/378 (ECB/2021/1); "

19. In Article 55 bis, paragraph 5 is replaced by the following text:
"5. A clearing structure does not meet the conditions required for access to Eurosystem monetary policy operations."

20. Article 57 is amended as follows:

a) The title is replaced by the following text:
"Selection of counterparties for access to open market operations executed by rapid tender procedures"

b) Paragraphs 1 to 3 are replaced by the following text:
"1. For open market operations executed by means of rapid tender procedures, counterparties are selected in accordance with paragraphs 2 and 3.
2. For structural operations carried out as firm operations which are executed by means of rapid tender procedures, the eligibility criteria defined in paragraph 3(b) apply.
3. For fine-tuning operations executed by means of rapid tender procedures, counterparties are selected as follows:
a) For fine-tuning operations carried out as foreign exchange swaps for monetary policy purposes and executed by means of rapid tender procedures, the range of counterparties is identical to the range of entities that are selected for Eurosystem foreign exchange interventions and are established in Member States whose currency is the euro. It is not necessary for counterparties to foreign exchange swaps for monetary policy purposes executed by means of rapid tender procedures to meet the criteria defined in Article 55. The criteria for selecting counterparties participating in Eurosystem foreign exchange interventions are based on the principles of prudence and efficiency set out in Annex V. The Bank of France may apply limit systems to control credit risks incurred vis-à-vis the different counterparties participating in foreign exchange swaps for monetary policy purposes; b) For fine-tuning operations carried out as temporary transfer operations or by means of liquidity take-up and executed by means of rapid tender procedures, the Bank of France selects, for a particular operation, a set of counterparties from among the institutions that meet the eligibility criteria defined in Article 55 and are established in its Member State. The institution's activity on the money market constitutes the main selection criterion. The Bank of France may select additional selection criteria, such as the efficiency of the trading room and the submission potential."

c) Paragraph 4 is deleted;

d) Paragraph 5 is replaced by the following text:
"5. Without prejudice to paragraphs 1 to 3, open market operations executed by means of rapid tender procedures may also be carried out with a wider range of counterparties than the range indicated in paragraphs 2 and 3, if this is the decision of the ECB Governing Council."

21. Article 63 is amended as follows:

a) In paragraph 1, point b), point i) is replaced by the following text:
"i) the reference rate is only one of the following rates at any given time:
– a euro money market rate provided by a central bank or by an administrator located in the Union and registered in the register referred to in Article 36 of Regulation (EU) 2016/1011 of the European Parliament and of the Council(), including the Euro Short-Term Rate (€STR) (including the daily composed or mean €STR), the EURIBOR, or other similar indices; for the first or last coupon, the reference rate may be a linear interpolation between two maturities of the same euro money market rate, for example a linear interpolation between two different maturities of the EURIBOR, – a constant maturity swap rate, including CMS, EIISDA, EUSA indices, – the yield of a euro area government bond or an index of several euro area government bonds with a maturity of one year or less, – an euro area inflation index; () Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as reference values in the context of financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1)."

b) In paragraph 1, point c) is replaced by the following text:
"c) multi-step or variable coupons with levels linked to SLPTs, provided that compliance with the SLPTs by the issuer or any company belonging to the same sustainability-linked bond issuer group is subject to verification by an independent third party in accordance with the conditions of the debt instrument."

22. In Article 73, the following paragraph 6 is added:
    "6. Assets generating cash flows must involve full recourse against the debtors."

23. The following Article 79 bis is inserted:
    "Article 79 bis
    Assessment of information relating to the eligibility of asset-backed securities The Eurosystem may decide not to accept the use of asset-backed securities as collateral in Eurosystem credit operations based on its assessment of the information provided. In its assessment, the Eurosystem examines whether the information provided is considered to be sufficiently clear, consistent and complete to demonstrate compliance with each of the eligibility criteria applicable to asset-backed securities, in particular whether the assets generating cash flows have been acquired in a manner that the Eurosystem considers to be a 'true sale' within the meaning of Article 75, paragraph 2."

24. Article 80 is amended as follows:

a) The title is replaced by the following text:
"Legacy covered bonds backed by asset-backed securities"

b) Paragraphs 1 to 5 are replaced by the following text:
"1. Without prejudice to the eligibility of regulated covered bonds in accordance with Article 64 bis, EEA regulated covered bonds to which an ISIN code was assigned before 8 July 2022 and which do not fall under Directive (EU) 2019/2162 of the European Parliament and of the Council(*) ('legacy covered bonds') may be backed by asset-backed securities, provided that the cover pool of these bonds (for the purposes of paragraphs 1 to 4, 'the cover pool') contains only asset-backed securities that meet all of the following conditions:
a) the cash flow-generating assets underlying the securities meet the criteria provided for in Article 129(1)(d) to (f) of Regulation (EU) No 575/2013 at the time the ISIN was assigned; b) the cash flow-generating assets have been sold by an entity having close links with the issuer, in accordance with the description in Article 138; c) they are used as a technical tool for the sale of mortgage loans or secured loans between the selling entity and the cover pool.

2. Subject to paragraph 4, the Bank of France takes the following measures to verify that the cover pool does not contain any asset-backed securities that do not meet the conditions set out in paragraph 1.
   a) Each quarter, the Bank of France requests a self-certification and undertaking from the issuer, confirming that the cover pool does not contain any asset-backed securities that do not meet the conditions set out in paragraph 1. The Bank of France's request specifies that the self-certification must be signed by the chief executive officer, the chief financial officer or a person of equivalent hierarchical level of the issuer, or by a person authorised to act on behalf of either. b) Each year, the Bank of France requests external auditors or persons responsible for verifying the composition of the cover pool belonging to the issuer to confirm retrospectively that the cover pool did not contain any asset-backed securities that did not meet the conditions set out in paragraph 1 during the verification period.

3. If the issuer does not respond to a particular request or if the Eurosystem considers that the content of a confirmation is incorrect or insufficient, so that it is impossible to verify whether the cover pool complies with the criteria of paragraph 1, the Eurosystem decides not to accept the EEA regulated covered bonds referred to in paragraph 1 as eligible collateral or to suspend their eligibility.

4. Where the applicable legislation or the prospectus does not provide for the inclusion, as assets of the cover pool, of asset-backed securities that do not meet the conditions of paragraph 1, no verification in accordance with paragraph 2 is necessary.

5. For the purposes of paragraph 1(b), close links are determined at the time the senior tranches of the asset-backed securities are transferred into the cover pool of the EEA regulated covered bond referred to in paragraph 1.
   (*) Directive (EU) 2019/2162"