Documentation on Monetary Policy Instruments and Procedures 28 June 2021 Documentation on Monetary Policy Instruments and Procedures – 28 June 2021 Central Bank of Ireland Page 2 Enquiries should be addressed to: Financial Markets Division Central Bank of Ireland PO Box 559 North Wall Quay Dublin 1 Telephone: 01 224 6000 Fax: 01 671 6042 e-mail: [email protected] Documentation on Monetary Policy Instruments and Procedures – 28 June 2021 Central Bank of Ireland Page 3 Contents OVERVIEW ............................................................................................................................................... 5 PART ONE Subject Matter, Scope, Amendment and Definitions ............................................. 9 PART TWO The Eurosystem Monetary Policy Tools, Operations, Instruments and Procedures ............................................................................................................................................. 22 TITLE I Open Market Operations .................................................................................................................................. 24 CHAPTER 1 Overview of Open Market Operations ................................................................................................................. 24 CHAPTER 2 Categories of Open Market Operations ............................................................................................................... 25 CHAPTER 3 Instruments for Open Market Operations .......................................................................................................... 28 TITLE II Standing Facilities .............................................................................................................................................. 34 CHAPTER 1 Marginal Lending Facility .......................................................................................................................................... 35 CHAPTER 2 Deposit Facility ............................................................................................................................................................. 36 TITLE III Procedures for Eurosystem Monetary Policy Operations ................................................................... 38 CHAPTER 1 Tender and Bilateral Procedures for Eurosystem Open Market Operations .......................................... 38 CHAPTER 2 Settlement Procedures for Eurosystem Monetary Policy Operations ...................................................... 49 PART THREE Eligible Counterparties ............................................................................................ 52 PART FOUR Eligible Assets .............................................................................................................. 56 TITLE I General Principles ............................................................................................................................................... 56 TITLE II Eligibility Criteria and Credit Quality Requirements for Marketable Assets .................................. 58 CHAPTER 1 Eligibility Criteria for Marketable Assets ............................................................................................................ 58 CHAPTER 2 Eurosystem’s Credit Quality Requirements for Marketable Assets ........................................................... 68 TITLE III Eligibility Criteria and Credit Quality Requirements for Non-Marketable Assets ...................... 73 CHAPTER 1 Eligibility Criteria for Non-Marketable Assets .................................................................................................. 73 CHAPTER 2 Eurosystem’s Credit Quality Requirements for Non-Marketable Assets ................................................. 86 TITLE IV Guarantees for Marketable and Non-Marketable Assets ................................................................... 89 TITLE V Eurosystem Credit Assessment Framework for Eligible Assets .......................................................... 91 TITLE VI Risk Control and Valuation Framework of Marketable and Non-Marketable Assets ................ 96 CHAPTER 1 Valuation Rules for Marketable and Non-Marketable Assets ...................................................................... 97 TITLE VII Acceptance of Non Euro-Denominated Collateral in Contingencies .............................................. 99 TITLE VIII Rules for the Use of Eligible Assets........................................................................................................... 99 TITLE IX Cross-Border Use of Eligible Assets .......................................................................................................... 105 PART FIVE Sanctions in the Event of a Failure to Comply with Counterparty Obligations .......................................................................................................................................... 108 PART SIX Discretionary Measures ............................................................................................... 111 Documentation on Monetary Policy Instruments and Procedures – 28 June 2021 Central Bank of Ireland Page 4 PART SEVEN Additional Legal Requirements .......................................................................... 115 PART EIGHT Final Provisions ........................................................................................................ 120 ANNEX I Minimum Reserves .......................................................................................................... 121 ANNEX II Announcement of Tender Operations ..................................................................... 124 ANNEX III Allotment of Tenders and Tender Procedures ..................................................... 126 ANNEX IV Announcement of Tender Results ........................................................................... 129 ANNEX V Criteria for the Selection of Counterparties to Participate in Foreign Exchange Intervention Operations .............................................................................................. 130 ANNEX VI Cross-Border Use of Eligible Assets ........................................................................ 131 ANNEX VIa Eligibility Criteria for the Use of Securities Settlement Systems and Links Between Securities Settlement Systems in Eurosystem Credit Operations ......... 135 ANNEX VII Calculation of Sanctions to be Applied in Accordance with Part Five and Financial Penalties to be Applied in Accordance with Part Seven ...................................... 140 ANNEX VIII Loan-Level Data Reporting Requirements for Asset-Backed Securities and the Requirements for Loan-Level Data Repositories ...................................................... 143 ANNEX IX Eurosystem Credit Assessment Framework Performance Monitoring Process .................................................................................................................................................. 152 ANNEX IXa Minimum Coverage Requirements for External Credit Assessment Institutions in the Eurosystem Credit Assessment Framework .......................................... 153 ANNEX IXb Minimum Requirements in the Eurosystem Credit Assessment Framework for New Issue and Surveillance Reports On Covered Bond Programmes . 155 ANNEX IXc ECAI Acceptance Criteria and Application Process ......................................... 157 [ANNEX X has been deleted reflecting the repeal of the equivalent annex in the General Documentation Guideline by Guideline ECB/2015/34.]........................................ 158 ANNEX XI Security Forms ............................................................................................................... 159 ANNEX XII Examples of Eurosystem Monetary Policy Operations and Procedures .... 160 ANNEX XIIa ......................................................................................................................................... 161 Documentation on Monetary Policy Instruments and Procedures – 28 June 2021 Central Bank of Ireland Page 5 OVERVIEW This Bank Documentation on Monetary Policy Instruments and Procedures, as the same may be amended, varied, or supplemented from time to time (the ‘Bank Document’ or ‘this Document’), contains terms and conditions applicable to counterparties in respect of monetary policy operations with the Central Bank of Ireland (the ‘Bank’). Counterparties should also take note of any legally binding Decisions adopted by the Governing Council of the ECB that relate to monetary policy operations and ECB press releases for general updates on changes to instruments, conditions, criteria or procedures in relation to Eurosystem credit operations. This Document should be read in conjunction with any supplements published on the Bank’s website from time to time. Introduction (1) In the light of Article 12.1 of the Statute of the ESCB, the ECB has the authority to formulate the single monetary policy of the Union and to issue the necessary guidelines to ensure its proper implementation in a uniform manner across NCBs. In accordance with Article 14.3 of the Statute of the ESCB, the NCBs have an obligation to act in accordance with such guidelines. (2) Guideline ECB/2014/601 (the ‘General Documentation Guideline’) sets down applicable rules in respect of the implementation of the Eurosystem monetary policy framework. The rules laid down in the General Documentation Guideline are implemented by the Bank