In light of the upcoming review of the European Central Bank’s monetary policy strategy, this briefing highlights the strategic relevance of a frequently underestimated component of the central banking toolkit: the collateral framework. While it typically attracts less attention than interest rate decisions or balance sheet policies, the framework plays a key role in shaping liquidity conditions and influencing market incentives by setting the eligibility criteria and terms for assets used in central bank operations. This paper examines its significance, particularly with regard to green and sovereign bonds, and underscores its often-neglected political implications, along with the need for greater transparency and scrutiny. Source : © European Union, 2025 - EP Read more