Secured central bank lending and liquidity buffer adjustment

How to approach unwinding mechanism according to Article 17 (2) of Commission Delegated Regulation (EU) 2015/61 in case institution uses retained covered bonds as a collateral for securities financing transaction where counterparty is domestic central bank?

According to Article 422 (2) (e) of EU Regulation 575/2013 (CRR) as well as according to Article 28 (3) second subparagraph of DR 2015/61, where the counterparty to the securities financing transactions or capital market-driven transaction is the domestic central bank of the credit institution, the outflow rate shall be 0 %. In this case the institution uses retained covered bonds as a collateral for securities financing transaction that fulfill the requirements of Level1 assets according to Article 10 (f) of DR 2015/61 and according to Article 7 (3) are not included in liquidity buffer. Such collateral is commonly used in TLTRO/LTRO transactions with intend to long term structural financing loan growth. Retained covered bonds are considered to have the qualities of a Level1 assets even though they are not included in liquidity buffer and therefore the institution is not reliant on non-liquid assets. The unwinding mechanism doesn’t consider rollover of such transactions in case the counterparty is ECB which is inconsistent with assumptions of liquidity outflows and does not level the playing field between the TLTRO/LTRO/MRO monetary policy operations. In addition to above mentioned the local translation of the Article 17 (2) of DR 2015/61 suggests that the unwinding mechanism is required in cases where liquid assets are used as a collateral for securities financing transaction. Which is not a case using retained covered bonds as collateral.