European Central Bank announced the reduction of haircuts applicable on GGBs/T-bills and govt guaranteed instruments (Pillar II and Pillar III) by more than 50% effective as of December 15.

Indicatively, ECB reduced the haircut on 1-year GGBs (T-bills) to 6.5% from 15%, on 1-3 years GGBs to 11% from 33% and on >10 years GGBs to 40% from c60% previously. 

On Pillar II govt guaranteed bonds (outstanding amount of cEur36 bn), the haircut on 1-year maturities was reduced to 13.5% from 23% previously (implying an extra liquidity release of Euro 4.0 bn).