All Eurosystem liquidity-providing operations are based on underlying assets provided by the counterparties. To prevent the Eurosystem from losses in connection with its monetary policy operations and to ensure equal treatment of counterparties, underlying assets have to meet specific eligibility criteria. These assets are divided into two categories: marketable assets and non-marketable assets.
All usable assets can be subject to cross-border use as part of the correspondent central banking model (CCBM) and, in the case of marketable assets, through eligible links between the securities settlement systems (SSSs) .
The CCBM is a mechanism developed by the NCBs and the ECB in which each NCB acts on behalf of other custodians ("correspondents") for assets accepted in their local depository or its settlement system.
The CCBM also provides a basis for the cross border use of triparty services enabling counterparties of an NCB to use such service through the NCB of the country in which the agent is established.
For example, a Luxembourg bank could guarantee a credit operation with the BCL by german assets, delivered by the Bundesbank, which acts as an intermediary.
In addition to the CCBM, eligible links between securities settlement and delivery systems can be used for the cross-border transfer of marketable assets.
A direct or relayed link between two securities settlement systems allows a participant to hold securities issued and deposited in another settlement system without being a participant. Before being used to transfer collateral for Eurosystem credit operations, these links must be assessed and approved.
For example, a Luxembourg bank could pledge to the BCL, on its account with Clearstream Luxembourg, eligible assets issued by Monte Titoli (Italy).
