Collateral easing in non-standard times: a review of the role of Additional Credit Claims in the Eurosystem collateral framework

In this paper we explore the role of the temporary and country-specific Additional Credit Claims (ACC) frameworks as a monetary policy implementation tool. We discuss their evolution and provide a novel and detailed description of all ACC measures adopted by the different euro area NCBs since 2012. Reviewing the literature, we document the channels through which ACCs contributed to liquidity distribution during the euro area sovereign debt crisis, the negative interest rate period and the pandemic. Drawing on panel data on the use of collateral and securities holding statistics, we document novel stylised facts about ACC mobilisation patterns during these episodes. A number of conceptual contributions and empirical findings emerge. While ACCs started out as a crisis instrument, the historical review highlights that ACCs constitute a policy tool that is suitable for enhancing monetary policy implementation. Empirically we find that pledging ACCs was not systematically associated with more concentrated collateral pools. Banks pledging ACCs were mostly universal banks and diversified lenders of varying size and were associated with higher funding costs for their short-term secured debt instruments, though the causality is unclear. Finally, drawing on the implementation and risk management experience with ACC frameworks as well as our empirical findings, we establish five lessons to inform future policy discussions on collateral