The Bank of England takes note of the EU General Court judgement on the ECB’s location policy for CCPs.

The judgement “annuls the Eurosystem Oversight Policy Framework published by the ECB in so far as it sets a requirement for CCPs involved in the clearing of securities to be located within the Eurozone.”

The G20 has mandated that CCPs take on an increasingly important role in the management of systemic risk internationally.

It is important for the safety and soundness of CCPs that they have access to liquidity arrangements in the currencies they clear. This is first and foremost the responsibility of the private operators. In addition, access to central bank liquidity can provide a backstop arrangement. The most efficient ultimate source of this backstop liquidity in the event of major market disruption is provided by the network of central bank swap-lines. This is already the case for a number of major foreign currencies.

The Bank of England recognises that the ECB has an interest in the safety and soundness of UK CCPs who clear significant amounts of euro-denominated contracts. The Bank and the ECB will continue to seek a coordinated and shared approach for achieving our common objectives of financial stability and the smooth functioning of financial market infrastructures.

Bank of England (PD) 2

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