CALCULATION OF MARGIN CALLS The total amount of eligible assets J ( for j 1 to J

The total amount of eligible assets J ( for j 1 to J

The balance sheet shows the deposits and the value of the securities used as collateral .

This implies that the value of the underlying asset is calculated as the market value of the asset less a certain percentage ( haircut ) .

Valuation principles for underlying assets When determining the value of underlying assets used in reverse transactions , the Eurosystem applies the following principles Marketable assets For each eligible marketable asset , the Eurosystem defines the most representative price source to be used for the calculation of the market value .

These problems cannot be solved by a guarantee from the EU budget (which in any case could not be larger than 1 15th of the value of the project).

In practice , most national central banks require additional collateral whenever the haircut adjusted market value of the collateral pool falls below the total amount to be covered .

This implies that counterparties need to provide underlying assets with a value at least equal to the liquidity provided by the Eurosystem plus the value of the initial margin .

In practice , most national central banks require additional collateral whenever the haircut adjusted market value of the collateral pool falls below the total amount to be covered .

This would imply that counterparties would need to provide underlying assets with a value at least equal to the liquidity provided by the Eurosystem plus the value of the initial margin .

This means that counterparties would need to provide underlying assets with a value at least equal to the liquidity provided by the Eurosystem plus the value of the initial margin .

If , after valuation , the underlying assets do not match the requirements as calculated on that day , symmetric margin calls are performed .

if , after valuation , the underlying assets do not match the requirements as calculated on that day , symmetric margin calls are performed .

Deposits of credit institutions , arising from value decreases of underlying assets regarding credits to these credit institutions

Deposits of credit institutions , arising from value decreases of underlying assets regarding credits to these credit institutions .

The incomes needed to repay loans have evaporated, and assets posted as collateral have lost value.

When determining the value of underlying assets used in reverse transactions , the Eurosystem applies the following principles

Symmetric Valuation principles The assets used as collateral are subject to a daily valuation and NCBs calculate the required value of underlying assets on a daily basis , taking into account the valuation principles required by the Eurosystem .

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The ECB publishes a calendar of the reserve maintenance periods at least three months before the start of each year .

The ECB publishes a calendar of the reserve maintenance periods at least three months before the start of each year . Maintenance periods begin on the settlement day of the first main refinancing operation following the meeting of the Governing Council at which the monthly assessment of the monetary policy stance is pre scheduled .

Similarly , if the value of the underlying assets , following their revaluation , exceeds a certain level , the counterparty may retrieve the excess assets or cash .

Similarly , if the value of the underlying assets , following their revaluation , exceeds a certain level , the counterparty may retrieve the excess assets or cash .

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52 See footnote 50 in this chapter .

Assurance level

Assuring Quality

Additional credit to credit institutions , arising from value increases of underlying assets regarding other credit to these credit institutions

Similarly , if the value of the underlying assets , fol lowing their revaluation , exceeds a certain level , the counterparty may retrieve the excess assets or cash .

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approach .

The projections , which are published twice a year , form part of the second pillar of the monetary policy strategy of the European Central Bank ( ECB ) and are one of several inputs into the Governing Council 's assessment of the risks to price stability . Quick tender the tender procedure used by the Eurosystem for fine tuning operations .

Money market the market in which short term funds are raised , invested and traded using instruments which generally have an original maturity of up to and including one year . Open market operation an operation executed on the initiative of the central bank in the financial markets involving one of the following transactions ( i ) buying or selling assets outright ( spot or forward )

As for the instruments used , reverse transactions are the main open market instrument of the Eurosystem and can be employed in all four categories of operations .

Fine tuning reverse operations Deposits related to margin calls Nominal value or repo cost Nominal

Nominal value or repo cost Nominal value

This implies that if the value , measured on a regular basis , of the underlying assets falls below a certain level , the national central bank will require the counterparty to supply additional assets or cash ( i.e. it will make a margin call ) .

This implies that if the value , measured on a regular basis , of the underlying assets falls below a certain level , the NCB will require the counterparty to supply additional assets or cash ( i.e. it will make a margin call ) .

This implies that if the value , measured on a regu lar basis , of the underlying assets falls below a certain level , the NCB will require the counterparty to supply additional assets or cash ( i.e. it will make a margin call ) .

Eligible collateral

EN Underlying assets

Central securities depository ( CSD ) an entity which holds and administers securities or other financial assets , holds the issuance accounts , and enables transactions to be processed by book entry . Assets may exist either physically ( but immobilised within the CSD ) or in a dematerialised form ( i.e. only as electronic records ) .

Variable value.

Depth value

Variable Value