Nomura economists have picked up on reports in German newspaper Welt, which claim that the ECB has continued to have problems with its collateral management. The paper reports that the Bank of France has granted too much credit to six banks due to insufficient haircuts made on the collateral (Short-Term European Paper, or STEP). The newspaper calculates the banks were able to get EUR 550mn in additional central bank money without having to provide the corresponding collateral. They continue to note that according to the ECB, the risk valuation discounts for STEP collateral calculated by the Banque de France were wrong in 113 cases but the banks had provided sufficient other collateral overall so there was no impact on monetary policy operations. The Welt article says the ECB has gradually softened its lending criteria, becoming more lenient on the types of collateral that can be used to secure loans, which has led to major flaws in the technical implementation of monetary policy.