Europe's not so secret liquidity. FT Alphaville began writing in detail about emergency liquidity assistance in the eurozone - that is, national central banks lending to stricken, but supposedly solvent banks on highly secretive terms, against collateral not accepted at the ECB - some two and a half years ago. Throughout that period, the ECB's precise oversight of this liquidity assistance remained in the dark. Despite the risk being taken by taxpayers, and despite the fact ELA effectively stopped the Greek, Irish and Cypriot banking systems from going under at various points. And despite procedures having been in place since 1999 for the ECB to restrict ELA by a national central bank if it endangers the rules of the euro (as used in Cyprus). Which is why this ECB decision announced on Thursday is rather important: In order to enhance the general understanding of the Governing Council's role in the provision of emergency liquidity assistance (ELA) by national central banks (NCBs), the Governing Council decided on 16 October 2013 to make the related procedural rules public. These rules describe in detail the steps to be taken and the information to be provided to the Governing Council in order for it to assess, pursuant to Article 14.4 of the Statute of the ESCB and of the ECB, whether the provision of ELA by Eurosystem NCBs to individual credit institutions interferes with the objectives and tasks of the Eurosystem. These procedures are available on the ECB's website. Indeed they're here. The rules don't divulge the interest rate, maturity, collateral (and so on) that is typically demanded of ELA borrowing. Though it remains guesswork, this stuff has been fairly well guessed at whenever ELA gets used (the rate is typically a 100-200bps premium over the Marginal Lending Facility of the ECB for example). But one revelation is the amounts of ELA that start to make the ECB nervous and demand advance permission: In the event of the overall volume of the ELA operations envisaged for a given financial institution or group of financial institutions (on a consolidated basis and including its foreign branches) exceeding a threshold of €500 million, the NCB (s) involved must inform the ECB as early as possible prior to the extension of the intended assistance. In the event of the overall volume of the ELA operations envisaged being expected to exceed a threshold of €2 billion, the Governing Council considers whether there is a risk that the ELA involved may interfere with the objectives and tasks of the Eurosystem. Upon the request of the NCB (s) concerned, the Governing Council may then decide to set a threshold and not to object to intended ELA operations that are below that threshold and conducted within a pre-specified short period of time. Oh, to recall the days when Irish ELA was regularly €70bn. Somehow we doubt that the ECB would have chosen to reveal these thresholds then (or at any time before Ireland decommissioned its ELA in one fell swoop: since then, overall ELA in the eurozone has been in Greece, where it is falling, and in Cyprus). A breath of fresh air for transparency though. Now, where are the OMT docs? Related link: Exorcising eurozone ELA as we know it - FT Alphaville