ANNUAL REPORT 2008 - Polymer Bank Notes of the World

franc funding needs of banks with no direct access to the Swiss National Bank’s operations,notably in the euro area, increased. Therefore, on 15 October the Swiss National Bank and theECB jointly announced measures to improve liquidity in short-term Swiss franc money markets,whereby the Eurosystem would provide its counterparties with Swiss franc funding received viaa swap line with the Swiss National Bank.The provision of Swiss franc liquidity by the Eurosystem took the form of EUR/CHF foreignexchange swaps at a fixed price and with a maximum allotment amount determined by the ECBin coordination with the Swiss National Bank. These swaps were initially introduced with aseven-day maturity only, but were later complemented by swaps with a three-month maturity,which were aimed at reducing tensions in this segment of the Swiss franc money markets.The maximum amount for each of these tenders was set at €20 billon in the 7-day and€5 billion in the 84-day operations. The EUR/CHF foreign exchange swaps met with fairlymoderate demand, with bidding volumes below the maximum amount in all operations. Thebid-to-cover ratio was stable at around 0.6 in the 7-day swaps and around 0.1 in the 84-dayoperations.The ECB’s euro liquidity provision to some EU central banksIn October and November 2008 the ECB signed agreements to provide euro liquidity to a numberof EU central banks outside the euro area. The ECB’s intention in establishing these agreementswas to support various measures taken by these central banks, all of which were aimed at improvingeuro liquidity in their respective domestic financial markets.This support took the form of repurchase agreements for an amount of up to €5 billion withthe Magyar Nemzeti Bank and for up to €10 billion with Narodowy Bank Polski. The ECBand Danmarks Nationalbank established a reciprocal currency swap arrangement amounting to€12 billion.5 Expansion of the list of collateralOn 15 October the Governing Council decided to expand the list of eligible collateral on atemporary basis until the end of 2009. Availability of collateral was not a constraint throughoutmuch of 2008, owing to the breadth of the Eurosystem’s collateral framework. Nevertheless, inthe light of the extension of liquidity at various maturities in euro and in US dollars and of theintroduction of fixed rate tenders with full allotment, the collateral framework was temporarilyexpanded as follows:• As of 22 October 2008 the credit threshold for marketable and non-marketable assets waslowered from “A-” to “BBB-”, with the exception of asset-backed securities, for whichthe credit quality threshold of “A-” remains in force. In addition, since 22 October 2008the Eurosystem has also accepted debt instruments issued by credit institutions, includingcertificates of deposit, which are not listed on a regulated market, but traded on certain nonregulatedmarkets deemed acceptable by the ECB. Subordinated marketable debt instruments,which are protected by an acceptable guarantee and which fulfil all other eligibility criteria,can also be used as collateral.ECBAnnual Report2008103