This article blueprints a framework to include bank bonds, thus increasing the reach from 2% to 34% of current collateral usage.
It also conducts an analysis using AFII's The Box framework as to which banks would be reasonably at risk of higher haircuts were such a change to effectuated, highlighting four banks currently being in the collateral program that do not seem to fit in with the ECB’s climate transition risk strategy.
Financial stability parameters are highly unlikely to be affected by the proposed changes, but we would anticipate a very clear signalling effect and impact in terms of the ECB's integration of climate transition risks.
