ECB Collateral Framework Updates Second-Best Rating Rule
The ECB has amended its monetary policy guidelines, effective 30 November 2026, introducing a second-best rating for private sector collateral.
The European Central Bank has updated its monetary policy collateral framework to use second-best ratings for private sector assets and refine haircuts based on asset use and amortisation type. The amendments follow a review of the risk control framework for credit operations announced in November 2025. The review aimed to maintain risk protection, improve consistency, and enhance the risk equivalence of assets while ensuring collateral availability remains intact.
A second-best rating issued by external credit assessment institutions will now determine the eligibility of private sector assets for use as collateral. This applies to assets such as unsecured bank bonds, covered bank bonds, and instruments issued by non-financial corporations and the non-euro area public sector. For euro area public sector assets, the first-best rating will continue to apply. The updated framework also introduces a more refined haircut schedule. It features finer granularity for individual credit claims by taking into account each claim's amortisation type and applies more refined haircuts for own-used or retained assets.
The new guidelines amend Guideline (EU) 2015/510 (ECB/2014/60) and Guideline (EU) 2016/65 (ECB/2015/35). They are the product of a review that sought to preserve sufficient risk protection, boost consistency, and strengthen the risk equivalence of assets while keeping collateral availability intact.
Financial subsidiaries treated as parents for haircuts
Under the new guidelines, financial subsidiaries of non-financial corporate issuer groups are assigned the same haircut category as their non-financial corporate parents. Specifically, these entities will now fall under haircut category III. This ensures consistency with their parent corporations. These subsidiaries will also be eligible as credit claim debtors and will be subject to the climate factor under the Eurosystem collateral framework.
Temporary COVID-19 eligibility ends in 2026
Credit claims that do not meet all the requirements of the general collateral framework but benefit from a COVID-19-related public sector guarantee will only remain eligible until the end of 2026. This temporary measure, announced on 25 June 2026, provides a final extension for these non-compliant instruments under the special framework.
Guidelines published in all EU languages
The updated guidelines, ECB/2026/26 and ECB/2026/27, are available in English on the ECB’s website. They will be published in all 24 official EU languages in the Official Journal of the European Union. For media queries, please contact Lena-Sophie Demuth, tel.: +49 162 2952316.
The amended guidelines are applicable as of 30 November 2026.
