ECB Quietly Rewrites Rules for Crisis Liquidity, Collateral and Climate Risk

FRANKFURT, Germany — In a dense set of legal amendments published Jan. 27, the European Central Bank rewired some of the least visible but most consequential rules behind the euro: who can borrow from it in a crisis, what collateral banks can pledge and how climate risk and digital assets will be treated when they knock on the ECB’s door for cash.

The changes, adopted in four guidelines dated Jan. 22 and taking effect March 30, 2026, reshape the Eurosystem’s monetary policy implementation framework. They open a conditional path back to ECB funding for banks in resolution, formalize the phase-out of pandemic-era collateral easing, introduce a climate-related adjustment to collateral values and acknowledge the rise of fully dematerialized and distributed-ledger securities.

Together, the technical tweaks amount to a quiet reset of the rules that will govern the next euro area banking failure, the legacy of the COVID-19 crisis and the ECB’s approach to the green and digital transitions.

The ECB said it had “published amendments to its guidelines on the implementation of monetary policy in the Eurosystem, applicable as of 30 March 2026.” The stated aim is to refine counterparty eligibility, update the collateral framework and align risk controls with evolving market structures and climate risks.

New route to liquidity for banks in resolution

One of the most sensitive changes concerns access to ECB credit operations for banks that have been put into formal resolution but kept open.

Under the European Union’s Bank Recovery and Resolution Directive and the Single Resolution Mechanism, authorities can place a failing or likely to fail institution into “open bank resolution.” In that strategy, losses are imposed on shareholders and creditors through a bail-in, and the bank is recapitalized and continues operating rather than being liquidated.

Until now, such banks risked being suspended or severely restricted from Eurosystem monetary policy operations. The general documentation that governs ECB lending gave the central bank broad discretion to limit or exclude institutions under resolution, reflecting concerns about lending to undercapitalized entities.

From March 30, that stance softens in codified form. The ECB’s new guidelines specify that entities subject to a resolution scheme based on an open bank strategy may have their access to standard operations reinstated or maintained if they meet defined prudential conditions.

One example spelled out in the Jan. 27 press release is a requirement that the competent supervisory authority confirm the institution “complies with regulatory minimum own funds requirements.” In practice, that means a resolved bank must be recapitalized to at least minimum capital ratios before resuming normal borrowing from the Eurosystem.

The change responds to a long-standing tension in Europe’s post-crisis framework: resolution authorities and supervisors want the option of keeping banks open through bail-in, but such strategies are difficult to execute if liquidity evaporates at the point of resolution.

EU finance ministers and lawmakers agreed in June 2025 on a package to strengthen the bloc’s crisis management and deposit insurance rules, known as the CMDI reform. That political deal is meant to make it easier to resolve small and mid-sized banks using industry-funded safety nets. The ECB’s move gives those plans a clearer liquidity backstop, while trying to limit moral hazard by tying access to hard prudential criteria and standard collateral rules.

From emergency collateral backstop to a tighter “normal”

The Jan. 27 legal acts also mark the operational culmination of a multi-year effort to dismantle the temporary collateral easing put in place during the pandemic and subsequent energy price shock.

At the height of the COVID-19 turmoil in April 2020, the ECB temporarily broadened the range of assets banks could use as collateral in refinancing operations. It accepted more credit claims, including smaller loans and loans backed by government guarantee schemes, relaxed some credit-quality thresholds and increased the role of national additional credit claim (ACC) frameworks. Those national schemes allowed central banks to mobilize a wider set of loans, often to households and small businesses, in exchange for central bank funding.

As financial conditions normalized, the ECB signaled that the pandemic measures would be phased out and that the overall collateral framework would be simplified and harmonized. In November 2024, its Governing Council agreed to move some of the temporary measures into the permanent rulebook and to discontinue others. The Jan. 27 guidelines now write that decision into law.

On the one hand, certain asset types that had been accommodated during the crisis become part of the general framework. These include asset-backed securities with a minimum rating of BBB- (credit quality step 3), subject to eligibility criteria, and marketable assets denominated in U.S. dollars, British pounds and Japanese yen. National central banks’ statistical in-house credit assessment systems are also recognized as a standard source of credit quality assessment.

On the other hand, some of the most generous and bespoke elements of the temporary framework are being removed. Private-individual and real-estate-backed loan pools accepted under ACC schemes, individual credit claims below the Eurosystem’s standard credit-quality floor and foreign-currency loans in ACCs will no longer be eligible. Two little-used categories under the general framework — retail mortgage-backed debt instruments and non-marketable debt instruments backed by eligible credit claims — are also being discontinued.

In earlier communication, the ECB said the changes “aim to enhance the harmonisation, flexibility and risk efficiency of the collateral framework” and constitute “a further step in gradually phasing out temporary collateral easing measures.”

For banks, the shift means greater reliance on standardized, higher-quality collateral. Large cross-border institutions that fund themselves primarily with marketable securities and high-grade credit claims may benefit from a more predictable, harmonized framework and the acceptance of foreign-currency bonds. Smaller and retail-focused banks that leaned heavily on idiosyncratic ACC pools will have to adjust their funding strategies as those options recede over the coming years.

Climate risk built into collateral haircuts

Another change, decided in 2025 and given legal effect in the new guidelines, brings climate considerations directly into the valuation of collateral.

To “protect the Eurosystem against potential declines in the value of collateral in the event of adverse climate-related transition shocks,” the ECB will introduce a climate factor in its collateral framework, the central bank said. The measure, which applies from June 15, 2026, targets marketable assets issued by non-financial corporations and their affiliates.

The climate factor works as an additional risk-control measure layered on top of existing haircuts. It can reduce the value the Eurosystem assigns to a corporate bond pledged as collateral depending on the issuer’s projected exposure to transition risks arising from the shift to a low-carbon economy. The ECB has indicated that it will use forward-looking climate scenarios, internal climate scores developed for its corporate bond portfolios, data from sectoral stress tests and the residual maturity of the securities to calibrate the adjustment.

The central bank has stressed that the calibration is intended to preserve “adequate collateral availability,” and that the measure focuses on transition rather than physical climate risks. Still, the move is significant in scope: for the first time, a large segment of corporate bonds will face climate-sensitive haircuts when used to obtain central bank liquidity.

Climate advocates are likely to see the step as aligning the ECB’s balance-sheet risk management with its warnings about climate change as a source of financial instability. Some political and industry voices, particularly in carbon-intensive sectors, have previously criticized central banks’ climate measures as straying into industrial policy. The ECB frames the climate factor as a prudential response to measurable financial risks, not as a tool to redirect credit.

Making room for fully digital and DLT-based collateral

Beyond bank resolution and climate, the Jan. 27 package also responds to changes in how securities are issued and settled.

The main guidelines update the treatment of international debt instruments held in international central securities depositories, such as Euroclear Bank and Clearstream Banking. Under the new rules, bonds issued in fully dematerialized form or other non-global-note structures can be accepted as Eurosystem collateral, provided they meet existing eligibility criteria and do not pose material legal or operational risks to the central bank’s collateral rights. Earlier frameworks had implicitly assumed the existence of physical “global notes.”

In a separate press release the same day, the ECB opened the door to securities issued using distributed ledger technology (DLT). From March 30, marketable assets issued in central securities depositories that offer DLT-based issuance or settlement services will be eligible as collateral, as long as they comply with EU rules for CSDs and can be settled in systems connected to the Eurosystem’s TARGET2-Securities platform.

“The Eurosystem will accept marketable assets issued in central securities depositories using distributed ledger technology as eligible collateral … as of 30 March 2026,” the ECB said. At the same time, it announced a “staggered approach” to examining under what conditions assets issued and settled entirely on DLT platforms, outside the current settlement infrastructure, could be considered in the future.

The decision ensures that early tokenized issuances integrated into regulated CSDs will not be shut out of the ECB’s collateral universe, even as the central bank moves cautiously on fully on-chain instruments.

A post-crisis rulebook for the next shock

None of the Jan. 27 changes affects the ECB’s policy rates. But they reshape the infrastructure through which monetary policy is implemented and banks secure liquidity — the elements that tend to matter most in a crisis.

By clarifying when a recapitalized bank in resolution can return to standard refinancing operations, the ECB provides resolution authorities with a clearer funding bridge for open-bank strategies developed after the eurozone debt crisis. By writing pandemic-era collateral easings into history and hardening climate and digital risk controls, it signals a return to a more rule-based, harmonized framework designed for a world of higher interest rates, decarbonization and tokenized assets.

Those details may sit deep in guidelines few outside specialist circles read. But in the next bout of banking stress, the path a troubled institution must follow to regain central bank funding, the assets it can mobilize to do so and the value those assets carry on the ECB’s balance sheet will be determined by the decisions quietly taken in Frankfurt this winter.