The European Central Bank (ECB) has relaxed its collateral requirements for repo eligibility in a bid to create more liquidity for European banks.
As part of its initiative, the ECB reduced the minimum threshold for some ABS to a single-A credit rating from triple-A.
The bank will also allow central banks at the national level within the euro-zone to take bank loans and ABS as collateral. The ECB has also reduced the reserve requirements for its repo operation.
The ECB will also provide two three-year refinance operations, which will replace the previous long-term repo operations or LTRO. Participating banks will have the option to return the funds after one year.
