EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 1 February 2011 
on amendments to the national monetary polic y operations framework with a view to further 
harmonising it with the Eurosystem 
(CON/2011/7) 
 
Introduction and legal basis  
On 10 December 2010 the European Central Bank (ECB)  received a request from Lietuvos bankas for an 
opinion on the recast of the Regulations on selection,  valuation and publishing of eligible assets used as 
underlying assets in credit operations of Lietuvos bankas  (hereinafter the ‘draft regulations’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and Article 2(2)  of Council Decision 98/415/EC of 29 June 1998 on 
the consultation of the European Central Bank by  national authorities regarding draft legislative 
provisions1, as the draft regulations relate to instruments of monetary policy in a Member State whose 
currency is not the euro. In  accordance with the first sentence of Artic le 17.5 of the Rules of Procedure of 
the European Central Bank, the Governing Council has adopted this opinion. 
 1.  Purpose of the draft regulations 
The main objective of the draft regulations is to further harmonise the monetary policy operations 
framework of Lietuvos bankas with that of the Eu rosystem by: (a) separating the eligibility criteria 
applicable to the assets used for collateralisation of  intraday credit in euro and of all other credit 
operations of Lietuvos bankas, (b) specifying credit standards for eligible assets, (c) referring in its 
monetary policy framework to the Eurosystem monetary policy framework. 
 2. General observations 2.1 Although Member States whose currency is not the euro retain their powers in the field of 
monetary policy, it is beneficial for them to gradually achieve consiste ncy with the operational 
framework for the implementation of the ECB’s monetary policy so that credit institutions 
operating in their territories can become acquain ted with the requirements that will apply once 
these Member States have adopted the euro. Such gradual harmonisation prior to the adoption of 
the euro will contribute to the smooth integration of the national central bank into the Eurosystem. 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 2.2 The ECB has previously commented on othe r Lithuanian regulations on monetary policy 
instruments, in particular the Lithuanian minimum reserves regime2. In its opinions, the ECB 
emphasised the need to further align the Lithuanian minimum reserves regime with Eurosystem standards, including the fact that the Lithuanian credit unions will also be subject to the Eurosystem’s minimum reserves requirements when  Lithuania adopts the euro. The ECB observes 
that all comments previously made on the Lit huanian minimum reserves regime are still valid. 
2.3 The ECB welcomes the provisions of the draft regulations that will contribute to the alignment of 
the monetary policy operations framework of Lietuvos bankas with that of the Eurosystem. 
 3. Specific observations 3.1 Implications of the draft regulations for the sel ection of assets eligible for collateralisation of 
intraday credit operations in TARGET2 by Liet uvos bankas as a connected central bank  
3.1.1 Lietuvos bankas concluded an agreement with the Eurosystem central banks on connection to the 
Trans-European Automated Real-time Gross se ttlement Express Transfer system (TARGET2)
3. 
This agreement specifies, inter alia , that the connected central banks will comply with Guideline 
ECB/2007/2 of 26 April 2007 on a Trans-European Automated Real-time Gross settlement Express 
Transfer system (TARGET2)4, subject to any mutually agreed appropriate qualifications and 
modifications.  
3.1.2 Lietuvos bankas, as a connected central bank, may provide intraday credit in TARGET2 to its 
participants under certain conditions. Such intraday  credit must be collateralised by eligible assets 
which meet the same quality standards and are subj ect to the same valuation and risk control rules 
as those prescribed for eligible collatera l for Eurosystem monetary policy operations5. Therefore, in 
providing intraday credit in TARGET2 and selecting th e eligible collateral in this context, Lietuvos 
bankas is bound by the Eurosystem monetary policy framework as set out in Guideline 
ECB/2000/7 of 31 August 2000 on monetary policy in struments and procedures of the Eurosystem6 
(hereinafter the ‘General Documentation’). 
3.2 Further specification of the rules applic able to intraday credit in euro  
 The draft regulations apply to all credit operations  of Lietuvos bankas, including intraday credit in 
euro. Since Lietuvos bankas is bound by the General Documentation only as regards the collateralisation of intraday credit in euro in TARGET2, the ECB welcomes the specification in the 
                                                 
2  See Opinions CON/2005/8 and CON/2008/66. All opinions are published on the ECB’s website at www.ecb.europa.eu. 
3  The national central banks of non-participating Member St ates may only connect to TARGET2 if they conclude an 
agreement with the Eurosystem central banks , see Article 4 of Guideline ECB/2007/2. 
4  OJ L 237, 8.9.2007, p. 1. 
5  Paragraph 4 of Annex III of Guideline ECB/2007/2 provides: ‘Intraday credit shall be based on eligible collateral and granted  
by means of collateralised intraday overdrafts and/or intraday repurchase transactions in compliance with the additional 
minimum common features (including the events of default therein listed, as well as their respective consequences) that the 
Governing Council specifies with respect to Eurosystem monetary policy operations. Eligible collateral shall consist of the sam e 
assets and instruments as eligible assets for Eurosystem monetary policy operations, and shall be subject to the same valuation  
and risk control rules as those laid down in Annex I to Guideline ECB/2000/7’. 
6  OJ L 310, 11.12.2000, p. 1. 
3 draft regulations of (a) the relevant eligibility criteria7 to be applied to the assets used for 
collateralisation of intraday credit in euro in TA RGET2, and (b) the relevant eligibility criteria to 
be applied to the assets used for collateralisati on of other credit operations of Lietuvos bankas. 
However, the ECB recommends further specification al so for other rules, in particular as regards 
credit standards including rules for credit assessme nt and guarantees, and risk control measures 
including the relevant valuation haircuts. 
3.3 Additional currency valuation haircut 
 As regards the additional 2% valuation hair cut applicable to the valuation of securities 
denominated in litai which are used to collate ralise Lietuvos bankas’s intraday credit in euro8, the 
ECB agrees with this additional haircut. Close cooperation with the ECB on an annual basis will 
ensure also in the future that  the currency risk is appropriately addressed and takes into account 
changing circumstances in the markets and other possible factors. 
3.4 References to the Eurosystem monetary policy framework 
 Some provisions of the draft regulations rep licate provisions from the General Documentation 
without any additional qualification. Other pr ovisions from the General Documentation are 
qualified to reflect particularities of the Lit huanian market. Such qualifications include, inter alia , 
acceptance of securities registered exclusively w ith the Lithuanian central securities depository9 
and of guarantees which are regulated  exclusively under Lithuanian law10. There are also several 
direct references to the General Documentation. 
 The ECB recommends: (a) using references to th e General Documentation where the aim of the 
specific provision is to replicate the General Documentation’s provisions without any additional 
qualification, and (b) replicating the General Do cumentation’s provisions in the national rules 
where they are further qualified. In any case, it must be ensured that (a) there is clarity as to which 
rules of the General Documentation apply and wh ere there is divergence from such rules, and 
(b) the national rules applicable to the collaterali sation of the Lietuvos bankas’s intraday credit in 
euro in TARGET2 meet the minimum requirement s established by the General Documentation. 
This means that any divergence from the rules of the General Documentation is only permissible if 
it contains more restrictive eligibility criteria. 
 
                                                 
7  Including type of asset, acceptable ma rkets, currency of denomi nation, settlement proce dures, type of/place of 
establishment of the issuer/guarantor, place of issue. 
8  Paragraph 19 of the draft regulations. 
9  Paragraph 6.8 of the draft regulations. 
10  Paragraph 11.4 of the draft regulations. 
4 This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 1 February 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET