Let me stop for a moment when it comes to these two concepts. The assessment of “solvency” by microprudential authorities under the current ELA agreement is based on a series of retrograde indicators, such as common equity Tier 1, Tier 1 and the total capital ratio, with a possible additional delay in the event of a credible prospect of recapitalisation within a limited period. It is likely that we will modify these indicators in the future to take account of future-oriented elements, in line with changing supervisory practices, in order to have a clearer picture of the creditworthiness of the bank and the relevance of continuing to provide ELA, and given that FOLTF involves a handover to resolution authorities. Vítor Constâncio then commented on the presentation which highlighted the application and penetration of the agreement on the basis of the experience gained so far during the euro crisis. In the ensuing discussion, the two speakers highlighted lessons learned from previous episodes and possible avenues for the future, in particular for possible future revisions of the existing ELA mechanism. The European Central Bank (ECB) today published the text of the Emergency Liquidity Assistance Agreement (ELA) following a decision of the Governing Council of 17 May 2017 to further increase the transparency of ELA. The rules and procedures for making ELA available are set out in the ELA Agreement, which also defines the role of the Governing Council in the provision of ELA by the national central banks (NCBs), in particular in the assessment provided for in Article 14.4 of the Statute of the European System of Central Banks (ESCB) and of the ECB, whether the provision of ELA by the Eurosystem NCBs is relevant to the objectives and tasks of the ESCB. This is a requirement of primary law according to which the granting of credit can only be made against “sufficient guarantees”. On the basis of this fundamental requirement, the Eurosystem sets the rules and conditions for collateral to be acceptable or “appropriate” for monetary policy purposes. This framework is defined by various legal acts and instruments of the ECB (in particular in the General Documentation Guideline).
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