The Eurosystem Collateral Management System (ECMS) is a unified system for managing assets used as collateral in Eurosystem credit operations.
Together with the other TARGET Services that the Eurosystem offers – and making use of the components it shares with those services – the ECMS ensures that cash, securities and collateral flow freely across Europe. The ECMS is made available through the Eurosystem single market infrastructure gateway (ESMIG), along with the other TARGET Services.
Why the ECMS?
Until recently, each euro area NCB had its own collateral management system. Even though they were all drawing on the same institutional framework, this may have led to possible divergences in the application of the rules in each country.
Replacing the previous fragmented and decentralised structure is in line with harmonising the implementation of the collateral framework across the euro area, in a consistent, proportionate, cost-effective manner, with increasing financial integration and reinforcing the Capital Markets Union.
How does the ECMS work?
- The ECMS keeps track of the individual collateral and credit positions of national central banks’ counterparties. It does this by using data sourced from central securities depositories, triparty agents and Eurosystem databases.
- The ECMS calculates the credit line available to each counterparty and sends this information to the central liquidity management tool.
- Counterparties’ mobilisation instructions are converted into settlement instructions which are settled in T2S.
- The ECMS handles corporate actions, triparty instructions and credit claim mobilisation in a harmonised way.