ANNUAL REPORT 2008 - Polymer Bank Notes of the World

Slovakia into the euro area on 1 January 2009.It found the SSS to be compliant with the userstandards and thus eligible for use in Eurosystemmonetary policy and intraday credit operations.In addition, the Eurosystem also undertook itsfirst comprehensive assessment of all SSSs,links and relayed links already in use, the resultsof which are expected to become available inspring 2009.In 2008 the Eurosystem assessed a new holdingarrangement for international debt securitiesin global registered form issued jointly by thetwo international central securities depositories(ICSDs), Euroclear Bank (Belgium) andClearstream Banking Luxembourg. This newarrangement – to be introduced by mid-2010 –will replicate the main principles of the NewGlobal Note arrangement introduced in 2006for international debt securities in global bearerform. In view of the decreasing issuance ofinternational debt securities in individual noteform, a revision of their holding structure was notjustified. It was therefore decided to withdrawthese securities from the list of eligible assetsfor Eurosystem credit operations. A transitionalperiod ending on 30 September 2010 has beendefined, in which securities of this type issuedbefore or on that date will continue to be eligiblefor use as collateral until their maturity.ESCB-CESR RECOMMENDATIONS FOR SECURITIESCLEARING AND SETTLEMENT IN THE EUROPEANUNIONIn 2001 the Governing Council approved aframework for cooperation between the ESCBand CESR on issues related to securitiesclearing and settlement systems. A jointworking group was created in the same year toadapt the recommendations for SSSs drawn upby the CPSS and the International Organizationof Securities Commissions (the CPSS-IOSCOrecommendations) to the EU landscape, andfrom 2004 also the recommendations for centralcounterparties. The work was frozen in 2005owing to three open issues regarding the scope,content and legal basis of the ESCB-CESRrecommendations.On 3 June 2008 the ECOFIN Council formallyinvited the ESCB and CESR to adapt and finalisetheir draft “Standards for securities clearingand settlement in the EU” by autumn 2008,respecting a number of principles, namelythat: i) the adopted text should take the form ofnon-binding recommendations addressed solelyto public authorities and not to market participants,ii) its scope should include ICSDs and excludecustodian banks, and iii) on credit and liquidityrisk controls, the benchmark accepted by theG10 – namely CPSS-IOSCO Recommendation 9for SSSs – should be adopted.In accordance with the ECOFIN Council’srequest, the ESCB-CESR working groupresumed its work and prepared a set of draftrecommendations which were subject to apublic consultation from 23 October 2008until 23 January 2009. During the consultationperiod, a public hearing for interested partieswas held.The European Parliament, the EuropeanCommission, CEBS, market participants andassociations were closely involved in thiswork at various stages. The final approval ofthe revised recommendations by CESR, theGoverning Council and the non-euro area NCBsis expected to take place at the end of the firstquarter of 2009. In parallel, CEBS is carryingout an analysis to identify areas where furthermeasures may be needed to bridge the gapbetween the ESCB-CESR recommendationsand the banking regulation applicable to bankswhich have internalised clearing and settlementactivities.The recommendations, once finalised, will be usedby central bank overseers and securities regulatorswith a view to safeguarding both the soundnessand efficiency of securities clearing and settlementin the EU as well as ensuring a level playing-fieldfor the various infrastructures. The ESCB-CESRrecommendations complement the work of otherEU fora and are regarded as one of the pillars ofthe EU policy on the post-trading sector, togetherwith TARGET2-Securities, the Code of ConductECBAnnual Report2008167