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FACTBOX-Form and nature of ECB's crisis measures


May 10 (Reuters) - The European Central Bank announced on Monday a new phase of emergency measures, designed to stop contagion from the Greek debt crisis infecting other single currency area members. Below are the measures presented on Monday, followed by previous non-conventional measures and their current expiry dates. INTERVENTIONS IN EURO AREA PUBLIC, PRIVATE DEBT MARKETS * The euro zone's 16 central banks will buy euro zone government debt and private debt on the ECB's behalf. European rules prevent it from buying government debt direct from governments meaning it must buy it from banks. * The scale of intervention is yet to be announced. It will be determined by the Governing Council, the ECB says. * The ECB says the objective is to address problems in bond markets which it says have hit monetary policy transmission. * It has said the purchases will be sterilised with specific operations to re-absorb the injected liquidity. One possible option floated by ECB President Jean-Claude Trichet was to hold operations encouraging banks to deposit cash or assets long term at the central bank. * National central banks do not appear to be limited on which bonds they can buy. The Bank of Italy said it has already started to buy Italian and Greek government bonds, adding that other sovereign securities could follow. FIXED-RATE LIQUIDITY OPERATIONS * The ECB will conduct fixed-rate three-month liquidity operations with full allotment in May and June. * The ECB will also hold another 6-month operation with full allotment in May at a rate fixed at the average minimum bid rate of the main refinancing operations over the 6-months it runs. REACTIVATION OF SWAP LINES WITH U.S. * The ECB will offer 7-day dollar loans on a weekly basis. It said the first would be held on Tuesday May 11, with subsequent operations planned to be carried out on Wednesdays. * An 84-day operation would be held on Tuesday, May 18 with settlement on May 20. The money will have to be paid back on Aug. 12. * The ECB did not say how long it planned to keep the operations, at which banks will be guaranteed to be lent all the money they ask for at a fixed flat rate, in place. *********** MEASURES INTRODUCED IN THE PAST *************** EXTRA REFINANCING OPERATIONS * The ECB introduced extra one-month, six-month and one-year lending operations (loans to commercial banks) to supplement its traditional one-week and three-month refis and ensure banks had guaranteed access to funds during the crisis. It ended the one and six month operations earlier this year saying they were no longer needed. COLLATERAL RULES * On May 3, the ECB dropped its minimum ratings threshold for accepting Greek bonds as collateral, meaning banks can exchange the bonds for central bank cash even if ratings agencies announce further downgrades. * In general, the ECB accepts debt rated as low as BBB- by at least one ratings agency, having extended a temporary relaxation of the threshold that was supposed to run out at the end of this year. From January next year, private sector debt rated BBB will face a new scale of haircuts. * The ECB has already lowered the bar on collateral during the financial crisis. Pre-crisis it only took debt rated in A territory, but it has loosened rules to allow banks to borrow ECB money on the back of assets rated as low as BBB-. * EXPIRY DATE - the ECB said this suspension on rating requirements on Greek debt will be maintained until further notice. The Bank of England made a similar move on Monday, deciding that ratings agency downgrades to a government bond would not necessarily stop it accepting such a security as collateral. . INTEREST RATE CORRIDOR * The ECB currently sets the rates on its overnight deposit and overnight loan facilities 75 basis points each side of its main policy rate -- now 1 percent -- but before October 2008, this gap was 100 basis points. * EXPIRY DATE - ECB President Jean-Claude Trichet said interest rates' setting remains appropriate, adding inflation expectations remain firmly anchored. * A recent Reuters poll of 78 economists showed that only around a quarter see any change before the end of this year . COVERED BONDS * In June, the ECB announced plans to buy 60 billion euros ($80.50 billion) of covered bonds -- securities issued by banks and backed by mortgages or public sector loans. * EXPIRY DATE - The bank has said it will buy bonds until the 60 billion has been spent or until end-June at the latest. It has not said whether it will hold the bonds until maturity or sell them again. It is not clear whether covered bonds could fall under the new bond buying plans announced on Monday. (compiled by Martin Santa; editing by Tony Austin) ($1=.7453 Euro) Keywords: ECB/MEASURES (marc.jones@thomsonreuters.com; +49 (0)69 7565 1219; reuters messaging: marc.jones.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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