Participants and collateral
Participants in the monetary policy operations of the Eurosystem
The monetary policy framework of the Eurosystem is designed to ensure there are as many eligible participating parties as possible. The requirements for eligibility to participate in monetary policy operations are the requirement to hold mandatory reserves, harmonised supervision, and financial credibility. The central banks of the member states can also set additional operational requirements that are laid out in contractual or regulatory orders of the national central bank. Eesti Pank requires for example that its transaction partners have a TARGET2 account. Although the implementation of monetary policy is decentralised and carried out by the national central banks, transactions are made under equal conditions and to the same schedules in all the member states that use the euro as currency. The central banks generally carry out monetary policy only with counterparties that are permanently based in their own country.
Collateral
Lending must always be backed by sufficient collateral so that participants in the Eurosystem are protected against risks from credit transactionas with transaction partners. The Eurosystem has defined a joint framework for the assets that are eligible as collateral so that all of the monetary policy operations and other credit transactions of the Eurosystem are carried out in harmony. The common framework for eligible collateral covers marketable and non-marketable assets that meets the eligibility criteria set out by the Eurosystem. Most of the eligible assets can be used cross-border in the correspondent central banking model (CCBM).
The eligible asset database of the Eurosystem can be found here.