ECB relaxes collateral rules for second time
Monday 25 June 2012
The European Central Bank has relaxed the rules on the assets it accepts as collateral in exchange for cheap loans in an effort to filter cash through to other sections of the economy. In a statement, on 22 June, the bank said it would accept car loans, leasing and consumer finance assets and securities backed by loans to small and medium-sized enterprises as collateral, as well as securities backed by mortgages on commercial property. The loans will be subject to haircuts of between 16% and 32%. It is the second time since December that the bank has broadened the collateral it accepts, as banks begin to run out of eligible assets to pledge to the bank in exchange for loans. The ECB has also hinted that it may cut its main borrowing rate at a meeting, on 5 July.