Collateral for Loans from Norges Bank – Consequences of Changes in the Rules

Abstract

Norges Bank requires collateral for all lending to banks. Collateral is provided in the form of securities which are pledged to Norges Bank. The list of eligible securities was changed in 2005. The aim of the changes has been to reduce Norges Bank’s risk while ensuring that the borrowing facilities available to banks remain sufficient for payments to be settled and monetary policy to be implemented effectively. This article presents the changes that have been made and analyses the effects on Norges Bank’s risk and banks’ borrowing facilities. We conclude that the changes in the rules have indeed reduced Norges Bank’s risk, and that the rules still provide for adequate borrowing facilities.