European Commission to transfer bond issuance rules to Eurosystem-based infrastructure – India Education | Latest Education News | World Education News

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The European Commission today launched the process of organizing the settlement of NextGenerationEU bonds and other EU bonds through the payment and settlement infrastructure of the Eurosystem (the European Central Bank and the national central banks of the euro area). By following this path, EU bond issuance will be aligned with the arrangements used by EU sovereign issuers and the European Stability Mechanism (ESM) whose bond transactions are settled in central bank money.

Following a selection process, the Commission has decided to work with the European Central Bank, which will act as paying agent, and the National Bank of Belgium, which will act as settlement agent for all EU debt securities once the EU issuance facility is in place.

The EU Issuance Service will create a level playing field for all central securities depositories and investors trading in EU-issued bonds. With the EU Issuance Service, the European Commission will have a settlement process reflecting its new role as one of the largest issuers of euro-denominated debt.

On the occasion of the launch of cooperation between the European Commission, the European Central Bank and the National Bank of Belgium, Commissioner Johannes Hahn in charge of budget and administration, ECB Executive Board member Fabio Panetta and the Governor of the National Bank of Belgium Pierre Wunsch met today. They agreed on the implementation of this project, which will be operational in the second half of 2023.

On this occasion, Commissioner Hahn said: “The EU Issuance Service has several advantages for the Commission as an issuer, but also for all investors in EU securities. Once implemented, this project will ensure that our bond settlement benefits from the involvement of the Eurosystem. They can be used more easily as collateral with the Eurosystem and will be accessible to all investors on an equal footing.

While the European Commission has a long-standing presence in capital markets, it launched two large-scale borrowing programs (SURE and NextGenerationEU) in 2020 and 2021, respectively, in response to the coronavirus pandemic and its consequences. On this basis and since October 2020, the Commission has issued €212.8 billion in long-term borrowing under the two programmes. More than half of this amount was issued under the Commission’s diversified financing strategy, which allows flexible borrowing under the best possible market conditions. With these programs of up to €100 billion and up to €800 billion respectively, the Commission is set to become one of the biggest emitters of euros.

This required a new approach also on the colonization side, and more information will become available as the project progresses.

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