ECB relaxes rule of bond lending to avoid repo squeeze

The European Central Bank said on Thursday it would relax the rules of its bond-lending programme to support the market for repurchase agreements, or repo, a form of short-term lending that underpins the financial markets. "The Governing Council decided that Eurosystem central banks will have the possibility to also accept cash as collateral in their PSPP (public sector purchase programme) securities lending (SL) facilities without having to reinvest it in a cash-neutral manner," the ECB said.
"The following Eurosystem members will make securities lending available also against cash collateral by 15 December 2016: the ECB, Nationale Bank van Belgi?/Banque Nationale de Belgique, Deutsche Bundesbank, Central Bank of Ireland, Banco de Espa?a, Banque de France, and De Nederlandsche Bank."