Short-Term European Papers, STEP (also abbreviated in German; sometimes also Step [i.e., lower case])

A quality label for money market paper with a short maturity – usually up to one year – on the primary market in Europe. The aim is to integrate the often legally different markets for such securities. The initiative for this came from the EU Banking Association together with the Financial Market Association and led to the STEP standards being adopted into national law by several EU countries. STEPs can be accepted by the Eurosystem as collateral for credit transactions. – However, since around 2011 there have been justified doubts about the quality of many STEP securities. At the beginning of 2013, 966 bonds worth EUR 44.5 billion had been issued by the French BNP Parisbas alone and given the SEP seal of approval by the French central bank. However, in the judgment of experts, very few of these securities comply with the Eurosystem’s rules and regulations; and a large proportion of the securities elevated to STEP status in France are demonstrably used only for short-term fund-raising by large French banks. – See money market segments, retail payments, electronic, collateral, security fund bond. – Cf. ECB Annual Report 2007, p. 172 (ECB monitoring).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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