To qualify for participation in the auctions, banks must be able to offer proof of appropriate collateral in the form of loans to other entities. These can be the public debt of member states, but a fairly wide range of private banking securities are also accepted. The fairly stringent membership requirements for the European Union, especially with regard to sovereign debt as a percentage of each member state's gross domestic product, are designed to insure that assets offered to the bank as collateral are, at least in theory, all equally good, and all equally protected from the risk of inflation. COUNT 4
QSN1 How does a bank make sure that they can participate in auctions? ANS1 must be able to offer proof of appropriate collateral in the form of loans to other entities QSN2 What kind of proof is acceptable for participation in auctions? ANS2 public debt of member states, but a fairly wide range of private banking securities are also accepted QSN3 What should all assets offered up as collateral be? ANS3 all equally good, and all equally protected from the risk of inflation QSN4 What must be a part of a states Gross Domestic Product in order for them to be considered for particpation in auctions? ANS4 sovereign debt