European Central Bank removes discretionary activation for its euro area CCP overnight credit facility and adds financial soundness safeguards

The European Central Bank’s Governing Council has decided to revise the Eurosystem’s dedicated overnight credit facility for eligible euro area central counterparties (CCPs), making it immediately available when needed rather than requiring a separate discretionary activation decision. The update is positioned as a crisis-related liquidity backstop under the TARGET Guideline and remains outside the monetary policy implementation framework. Access will continue to be governed by requirements in the TARGET Guideline, with additional safeguards introduced so that only financially sound euro area CCPs with sound liquidity risk management can use the facility. Borrowing will be priced at the ECB marginal lending facility rate, with overnight maturity and the possibility of rollovers across business days, and collateralisation requirements remain in line with current TARGET Guideline provisions; in cases of non-compliance with the new safeguards, the Governing Council may apply discretionary prudential measures. The changes are expected to take effect through an amendment to the TARGET Guideline and further legal acts covering the safeguards, related assessments and associated discretionary measures, with the application date for all related legal acts foreseen for the fourth quarter of 2025; the legal acts will be published once formally adopted.