Legal & Regulatory News

ECB to accept sustainability-linked bonds as collateral

The European Central Bank (ECB) has announced that bonds with coupons linked to sustainability performance targets will become eligible as collateral for Eurosystem credit operations and also for Eurosystem outright purchases for monetary policy purposes, provided they comply with all other eligibility criteria. The decision is applicable from 1 January 2021.

The coupons must be linked to a performance target referring to one or more of the environmental objectives set out in the EU Taxonomy Regulation and/or to one or more of the United Nations Sustainable Development Goals relating to climate change or environmental degradation. This signals the Eurosystem’s support for innovation in the area of sustainable finance.

Non-marketable assets with comparable coupon structures are already eligible. The decision aligns the treatment of marketable and non-marketable collateral assets with such coupon structures.

Click here to access the press release.