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The Beginning of the End of the ECB Repo Facility for Securitization?

After widespread rumor and supposition, the European Central Bank (ECB) has in recent weeks taken the first public steps to try to reduce the current almost total reliance by the European securitization market on its repo facility.

Following months of rumors of increasingly harsh treatment by the ECB of applications for the inclusion of new issues of asset-backed securities (ABS) to its list of eligible assets and significant increases to the market value ''haircuts'' applied to pre-credit crunch transactions (with reports of total haircuts of up to 50 percent for some deals), the ECB announced on 20 November 2009 the first formal limitation to its emergency financing policies enacted in the aftermath of the credit crunch.

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