The linking of the CSD Prague to the foreign depositary Euroclear Bank (Belgium) has been approved by the European Central Bank (ECB) and the Central Bank of Belgium (NBB) as eligible for Eurosystem credit operations. This means that securities (primarily bonds) held in a Czech Central Depository can be used in the Eurosystem as collateral against ECB credit.
“I am very pleased that after two years we managed to complete the project and we are able to offer this requested service to the Ministry of Finance. The Czech Republic can now issue government bonds under Czech law registered at the Czech central depository in euros, which can be used by institutional investors as collateral against the ECB. This makes these government bonds completely competitive with bonds issued by other eurozone countries. We are the second non-euro area country after Denmark to achieve this status,” says Ondřej Dusílek, CEO of the CSD Prague.
CSDs domiciled outside the euro area must meet the criteria set by the ECB, including the link to a CSD domiciled in a euro-area country. Important conditions include direct access to TARGET2 (the euro area payment system) as well as respecting the working days of this system. “This means that the central depository must be able to settle transfers in EUR, for example, on December 24, when we have a public holiday. That brings increased demands on our employees and our participants. Nevertheless, I believe that this step will be appreciated not only by our participants, but also by other bond issuers, who can now issue euro bonds with the so-called “ECB eligible” status and thus achieve lower interest rates,“concludes Ondřej Dusílek.