The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR) with respect to the requirements for credit risk, credit valuation adjustment risk, operational risk, market risk, and output floor. EESC also opined on the proposals for a regulation to establish the European single access point (ESAP), a directive and a regulation to amend certain Directives and Regulations for the establishment and functioning of the ESAP.
Opinion on proposed regulation to amend CRR. EESC welcomes the implementation of the remaining elements of the Basel III standards agreed by the Basel Committee for Banking Supervision. EESC calls on legislators to ensure that the proposals envisage a proper balance between two complementary objectives, namely ensuring that EU banks become more resilient and the need to ensure financial soundness and competitiveness in the sector. EESC calls on EC to perform periodical assessments of the actual impact of the proposals, in order to evaluate whether their implementation contributes to more financial market stability and resilience in the banking sector, while also taking into account the competitiveness of EU banks. The EESC also acknowledges that sound and balanced capital ratios contribute to competitiveness. EESC welcomes the European Commission's (EC) approach of strengthening the focus on environmental, social and governance (ESG) risks in the prudential framework (in-line with Basel III), including by better accounting for financial market risks related to climate changes. EESC also welcomes the ESG disclosure work from the European Banking Authority (EBA) aimed at properly assessing banks’ environmental risks and their finance strategy for the transition to a net-zero carbon economy. EESC also calls on EBA to speed up its scrutinizing work on the pillar one framework to determine whether it sufficiently captures the unique features of climate risks. In addition, EESC calls on EBA to strengthen its endeavors to address the shortcomings in the current ESG disclosures at EU level, including on fossil fuels-related assets and assets subject to chronic and acute climate change events, so as to encourage a substantial increase in the sustainable finance strategies of banks.
Opinion on proposals related to ESAP. EESC supports the ESAP, which is a tool that is contributing to a more sustainable, digital, and inclusive economy, to strengthening digital sovereignty, and to better integrating the capital markets. EESC considers that the ESAP should be more ambitious and that more added value should be created by processing the information instead of being only an information tool for gathering raw information with a single access point. The aggregation and transformation of data and of sectoral and territorial reports and analyses should be delivered through ESAP. EESC suggests that ESAP should be built as a flexible tool and that it should be possible to add new data categories and to communicate with national registers or Eurostat, taking into account different types of technologies. ESAP should provide a clear synergy between the sustainable development goals and the Green Deal indicators. EESC suggests that it is very important for the ESAP to ensure standard procedures, transparency, data integrity, and the credibility of the source of information, user-friendly automatic data validation, and proper control of the collection body for data protection. Proper and adequate supervision of financial and ESG data providers will be important in the near future. EESC considers that a dedicated helpdesk is needed to assist with submitting the information in the correct format and ensuring that it is technically usable, and that training in financial and digital literacy are also required. A minimum set of economic Key Performance Indicators (KPIs), defined at the EU level with common methodology, could be inserted into ESAP to ensure better and broader usage.
Keywords: Europe, EU, Banking, CRR, Basel, Climate Change Risk, ESG, Regulatory Capital, Output Floor, Market Risk, Credit Risk, CVA Risk, Operational Risk, ESAP, Regtech, EESC
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