ESRB published a report that provides an overview of the macro-prudential measures that were adopted in EU in 2018. Across EU, most member states adopted macro-prudential measures in 2018 and more measures were taken in 2018 than in 2017, which is the previous review period.
The report describes the changes in policy frameworks and outlines the national macro-prudential measures that were adopted in 2018. It first reviews certain trends seen across different instruments and then turns to specific instruments. The report also contains three special features. Special Feature A considers the use to date of national flexibility measures under Article 458 of the Capital Requirements Regulation (CRR) by member states, along with the lessons learned from their experience with these measures. Special Feature B introduces the concept of macro-prudential stance, particularly the interlinkages between the stance assessment and the policy action assessment. Special Feature C provides an overview of the upcoming changes to macro-prudential provisions in CRR and the Capital Requirements Directive (CRD) IV.
Apart from the activation of the countercyclical capital buffer (CCyB) and the increase in the CCyB rate in several European Economic Area member states, nine member states introduced a systemic risk buffer (SyRB) or recalibrated the SyRB rate. As there are indications that the financial cycle is turning in some countries, more member states tightened the CCyB. By the end of 2018, twelve countries in the European Economic Area had decided on a positive CCyB rate. Despite extensive international and European guidance for the use of CCyB, differences in key features of the national frameworks remained. These include the objective of the instrument, the neutral buffer rate, and the indicators used to inform the buffer decision. Given shortcomings of the credit-to-GDP gap as a reference indicator for CCyB decisions, particularly after periods of prolonged excessive credit growth and for transition economies, some member states developed adjusted indicators and placed greater weight on additional indicators and discretion to arrive at a policy judgment. After that, the most frequently introduced measure in 2018 pertained to the caps on debt service-to income (DSTI) ratios. Changes to the methodology used to identify systemically important institutions (SIIs) and to set their buffers were also made relatively often.
Related Link: Report (PDF)
Keywords: Europe, EU, Banking, Systemic Risk, CCyB, CRR, SyRB, CRD IV, Macro-Prudential Policy, Macro-Prudential Measures, ESRB
Previous ArticleEBA Report Examines Functioning of Supervisory Colleges in EU
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.