Regulation BCL 2012 No. 13 of 9 November 2012 implementing the ECB Decision of 10 October 2012 amending ECB/2012/18 on temporary additional measures concerning Eurosystem refinancing operations and collateral eligibility (ECB/2012/23)

BANQUE CENTRALE DU LUXEMBOURG
Regulation of the Central Bank of Luxembourg 2012/ No. 13 of 9 November 2012 implementing the decision of the European Central Bank of 10 October 2012 amending ECB/2012/18 on temporary additional measures concerning Eurosystem refinancing operations and collateral eligibility (ECB/2012/23)

The Directorate of the Central Bank of Luxembourg;

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 127(2), first indent;

Having regard to the Statutes of the European System of Central Banks and of the European Central Bank, and in particular Articles 12.1 and 14.3, in conjunction with Article 3.1, first indent, and Article 18.2;

Having regard to Article 108bis of the Constitution;

Having regard to the Law of 23 December 1998 on the monetary status and the Central Bank of Luxembourg (hereinafter the "Central Bank"), as amended, in particular Articles 2(1), 2(2) and 34(1);

Whereas, pursuant to Article 18.1 of the Statutes of the European System of Central Banks and of the European Central Bank, the European Central Bank (ECB) and the national central banks of the Member States whose currency is the euro may conduct credit operations with credit institutions and other market participants on the basis of appropriate collateral. The criteria determining the eligibility of collateral for Eurosystem monetary policy operations are set out in Annex I to ECB/2011/14 of 20 September 2011 on the monetary policy framework of the Eurosystem, as implemented by the General Terms and Conditions of the Bank's operations. Additional temporary measures concerning collateral eligibility are set out in ECB/2012/18 of 2 August 2012 on temporary additional measures concerning Eurosystem refinancing operations and collateral eligibility, amending ECB/2007/9 1;

Whereas, pursuant to ECB/2011/14, Annex I, Section 1.6, the Governing Council may at any time modify the instruments, conditions, criteria and procedures relating to the conduct of Eurosystem monetary policy operations. Furthermore, pursuant to Section 6.3.1, the Eurosystem reserves the right to determine whether an issue, issuer, debtor or guarantor meets high credit quality standards; for this purpose, it relies on any information it deems relevant 2;

Whereas, in order to improve the provision of liquidity to counterparties in Eurosystem monetary policy operations, the Governing Council has decided to temporarily relax the eligibility criteria for assets that must be used as collateral in the context of Eurosystem monetary policy operations by accepting that negotiable debt instruments denominated in sterling, yen or US dollars constitute eligible assets for the purposes of monetary policy operations. A hairdress reflecting the historical volatility of the relevant exchange rates should be applied to these negotiable debt instruments;

Whereas these additional measures must apply temporarily, until the Governing Council considers that they are no longer necessary to ensure the proper functioning of the monetary policy transmission mechanism. Consequently, ECB/2012/18 had to be amended for the purpose of their implementation. The implementation of these amendments by the Central Bank implies that Regulation BCL 2012/ No. 12 of 12 September 2012 implementing the decision of the European Central Bank of 2 August 2012 on temporary additional measures concerning Eurosystem refinancing operations and collateral eligibility (ECB/2012/18) (hereinafter "Regulation 2012/ No. 12") must also be amended.

1 OJ L 331 of 14.12.2011, p. 1.
2 OJ L 218 of 15.8.2012, p. 20.

Art. 1. Amendments
Regulation 2012/ No. 12 is amended as follows:
1) Article 1 is replaced by the following text:

"Article 1. Additional measures concerning refinancing operations and eligible collateral

1. The rules applicable to the conduct of Eurosystem monetary policy operations and the collateral eligibility criteria provided for in this Regulation, as specified in paragraph 2, apply in conjunction with the General Terms and Conditions of the Bank's operations.
2. Articles 3, 4 and 4a of this Regulation apply to collateral denominated in foreign currencies.
3. In the event of a conflict between this Regulation and the General Terms and Conditions of the Bank's operations, this Regulation shall prevail. The Central Bank continues to apply all provisions of the General Terms and Conditions of the Bank's operations without modification, unless contrary provisions are provided for in this Regulation.";
   2) the following Article 4a is inserted:

"Article 4a. Admission of certain assets denominated in sterling, yen or US dollars as eligible collateral

1. The negotiable debt instruments described in Section 4.1.1 of Annex 8 of the General Terms and Conditions of the Bank's operations, if denominated in sterling, yen or US dollars, constitute eligible collateral for the purposes of Eurosystem monetary policy operations, provided that:
   a) they are issued and held/settled in the euro area; b) the issuer is established in the European Economic Area; and c) they meet all other eligibility criteria set out in Section 4.1.1 of Annex 8 of the General Terms and Conditions of the Bank's operations.
2. The Central Bank applies the following hairdress to these negotiable debt instruments: a) a hairdress of 16% for assets denominated in sterling or US dollars; and b) a hairdress of 26% for assets denominated in yen.".

Art. 2. Entry into force
This Regulation shall enter into force on the day of its publication.

Art. 3. Publication
This Regulation shall be published in the Mémorial and on the website of the Central Bank (www.bcl.lu).

BANQUE CENTRALE DU LUXEMBOURG
The Directorate