Domestic public-sector lending
In German public finance the eligibility for the cover pool can be assumed, for instance, with loans - usually in the form of a borrower’s note loan (“Schuldscheindarlehen”) - to domestic local governments. Beside it bonds of the German federal government and the German federal states – the “Bundesländer” – are often being used for the public cover pool.
Claims directly leveled against public corporations and public-law institutions are eligible for the cover pool under certain conditions. The major point is
The eligibility of so-called non-recourse financing (“Forfaitierung mit Einredeverzicht”) had already been legally established with the Pfandbrief Act of 2005. Those lendings comply with § 20 under the condition that the public authority declared a waiver of any pleas. This can be derived from the wording “ …claim acknowledged in writing as being as being free from any pleas…” (§ 20 par. 1 sent. 1 PBA).
In addition, loans guaranteed by the public sector constitute an important business segment for Pfandbrief banks. The eligibility criteria of state-guaranteed lendings are set forth in § 20 par. 1 sent. 1 No. 2 PBA. Since the entry into force of the amendment of the Pfandbrief Act in 2009, the guarantee may be formed
Hartisch, Winnie: Rechtliche Rahmenbedingungen für Kassenkredite im Nothaushalt, in: Der Gemeindehaushalt 4/2008, p. 85.