Regulation on the Access of Banks to Borrowing and Deposit Facilities in Norges Bank etc.
Regulation laid down by Norges Bank on 18 December 2019 pursuant to Section 3-1, subsections 2 and 5, of Act No. 31 of 21 June 2019 on Norges Bank and the Monetary System etc.
For information purposes only. Legal authenticity remains with the official Norwegian version as published in Norsk Lovtidend.
I. Scope and definitions
Section 1 Scope
The Regulation concerns access to an account at Norges Bank and access to the lending and deposit facilities at Norges Bank.
Section 2 Definitions
For the purposes of this Regulation, the following definitions apply:
(1) settlement day: as defined in Terms and Conditions for Account Management at Norges Bank;
(3) intraday loans: loans from Norges Bank that are disbursed and settled on the same settlement day;
(4) overnight loans: overnight loans from Norges Bank;
(5) intraday deposits: deposits made with Norges Bank through the settlement day;
(6) overnight deposits: deposits made with Norges Bank overnight;
(7) F-loans: loans from Norges Bank at a fixed or floating rate and a fixed term determined by Norges Bank;
(8) F-deposits: deposits at Norges Bank at a fixed or floating rate and a fixed term determined by Norges Bank;
(9) Norges Bank's facilities: standing facilities, F-loans and F-deposits;
(10) standing facilities: intraday deposits, intraday loans, overnight deposits and overnight loans;
(11) bank: enterprise licensed under Section 3-2, cf. Section 2-7, of the Financial Institutions Act;
(12) counterparty: monetary policy counterparty or other financial sector enterprise with an account at Norges Bank;
(13) monetary policy counterparty: bank or Norwegian branch of a foreign bank that actively participates in payment and credit intermediation and that upon application has been classified by Norges Bank as a monetary policy counterparty.
II. Norges Bank's facilities
Section 3 Access to Norges Bank's facilities
(1) To access Norges Bank's facilities, a counterparty must hold an account at Norges Bank in accordance with the terms and conditions for account management at Norges Bank applicable at any time.
(2) Monetary policy counterparties may hold an account at Norges Bank and have access to all Norges Bank's facilities.
(3) Counterparties other than monetary policy counterparties may hold an account at Norges Bank and be granted access to Norges Bank's standing facilities, or parts of these, on terms decided by Norges Bank. In its assessment, the Bank gives particular weight to the extent to which the counterparty participates actively in payment intermediation and whether account management for the counterparty will contribute to financial stability or otherwise promote the purpose of central banking activities.
(4) Applications for status as a monetary policy counterparty or for access to Norges Bank's facilities shall be made on an application form issued by Norges Bank.
Section 4 Norges Bank's standing facilities
(1) The rate of interest on intraday deposits and intraday loans is zero.
(2) Norges Bank determines the rate of interest on overnight deposits and overnight loans. Interest on overnight deposits can be set at different rates on terms determined by Norges Bank and according to procedures determined by the Bank.
(3) The interest on overnight deposits and overnight loans is calculated daily in arrears, based on a calendar year of 365 days.
(4) The interest on overnight loans is debited on the first settlement day after the loan agreement was drawn up. If the first day or any following days in a month are not settlement days, the interest for this/these day(s) will be debited on the second settlement day in that month.
(5) The interest on overnight deposits is credited on the first settlement day after the deposit was made. If the first day or any following days in a month are not settlement days, the interest for this/these day(s) will be credited on the second settlement date in that month.
(6) Intraday loans and overnight loans are provided against collateral in accordance with the provisions in Section 6. The borrowing limit is equivalent to the value of the pledged assets after a haircut determined by Norges Bank.
Section 5 F-loans and F-deposits
(1) Norges Bank sets the specific terms for F-loans and F-deposits. F-loans and F-deposits cannot be repaid or withdrawn before term.
(2) F-loans are provided against collateral in accordance with the provisions in Section 6. The collateral shall be posted on disbursement of the loan.
(3) The interest on F-loans shall be paid on the settlement day the F-loan falls due.
(4) The interest on F-deposits will be credited on the settlement day the F-deposit is disbursed.
(5) For each issue, Norges Bank decides whether an F-loan or F-deposit will be issued at a pre-determined rate of interest or through ordinary or Dutch auction.
(6) Submitted bids are binding. Norges Bank may reject any bid.
(7) In auctions, F-loans or F-deposits are allotted according to the bid or bids that together with all the more competitive bids make up the amount to be allotted or called in.
(8) In an ordinary auction, interest is paid or received according to the bid submitted by each individual bidder.
(9) In a Dutch auction, all bidders pay or receive the same rate of interest. For F-loans, this is the lowest accepted interest rate. For F-deposits, this is the highest accepted interest rate.
Section 6 Collateral for loans
(1) Loans provided by Norges Bank shall be adequately collateralised.
(2) Norges Bank may accept the following assets as collateral for loans:
a) bonds and short-term paper,
b) units in securities funds registered in a Norwegian securities register,
c) F-deposits with Norges Bank,
d) deposits with another central bank.
(3) Norges Bank may in special cases accept other assets as collateral.
(4) Norges Bank lays down more specific collateral eligibility rules, including requirements relating to:
a) nominal currency,
b) minimum outstanding volume,
c) credit rating,
d) listing on a stock exchange or other approved market place,
e) registration in an approved securities register, and
f) time to maturity or redemption.
(5) Norges Bank may require a counterparty to increase the collateral pledged if the value of the counterparty's loan and accrued interest exceeds the borrowing value of the collateral. Norges Bank may also utilise the counterparty's deposits at Norges Bank as collateral. Interest will be paid on deposits used as collateral in accordance with Section 4. If the borrowing value of the pledged collateral is lower than the value of the loan at the end of the settlement day, the counterparty will be charged a fee, cf. Section 8.
(6) Norges Bank may lay down more specific rules for valuation and haircuts applied to pledged assets.
(7) Norges Bank may change the collateral eligibility requirements, including for loans already disbursed.
(8) A list of the assets Norges Bank has accepted as collateral and the rules for valuation and haircuts are available on Norges Bank's website. The same applies to the requirements set by Norges Bank under Subsection 6.4.
Section 7 Termination, restriction, change or suspension of access to Norges Bank's facilities
(1) Norges Bank may terminate, restrict, change or suspend access to Norges Bank's facilities if:
a) this Regulation or other terms and conditions applying to the Bank's facilities are infringed;
b) the counterparty's financial position indicates this;
c) a monetary policy counterparty no longer meets the eligibility criteria for a monetary policy counterparty; or
d) the counterparty no longer meets the terms and conditions under which access was granted or the counterparty's activities no longer promote the purpose of central banking activities to the same degree.
Section 8 Prices and fees
(1) Norges Bank sets prices for account management at Norges Bank annually.
(2) Norges Bank may impose fees for infringement of the provisions of this Regulation or of Norges Bank's terms and conditions for account management.
III. Other provisions
Section 9 Transitional rules
(1) Enterprises that have access to Norges Bank's facilities when this Regulation enters into force are not required to reapply for access under Subsection 3.4 and are regarded as counterparties in accordance with the Regulation.
(2) Norges Bank may adopt changes to existing counterparties' access to facilities in accordance with Section 3 after this Regulation enters into force.
Section 10 Entry into force
(1) This Regulation enters into force on 1 January 2020.
(2) Regulation No. 240 of 25 February 2009 on the access of banks to borrowing and deposit facilities in Norges Bank etc. is repealed on the same date.