Featured Product

    EBA Assesses Impact of NSFR on Functioning of Precious Metal Markets

    November 17, 2021

    The European Banking Authority (EBA) published a report on the possible impact of the net stable funding ratio (NSFR) on the functioning of the markets for precious metals. The revised Capital Requirements Regulation (CRR2) mandates EBA to submit a report to the European Commission assessing whether it would be justified to reduce the required stable funding factor for assets used for providing clearing and settlement services or for providing financing transactions of precious metals. The report discusses the impact of the introduction of NSFR on the market of the precious metals and analyzes the impact of possible modifications of the prudential treatment of physically traded commodities under the NSFR.

    Leveraging the information collected by the Basel Committee on Banking Supervision (BCBS) and EBA under the Quantitative Impact Studies (QIS) project, the report shows that banks started to comply with the new liquidity requirements well in advance of their entry into force (June 2021, for the NSFR). During 2011–2019, a sample of about 200 banks reduced the shortfall of stable funding from USD 2.8 trillion to zero and, at the end of 2019, the average weighted NSFR was well above the minimum of 100%. In the same period, there is no evidence of negative effects due to the expected potential reduction of liquidity in the markets for precious metals. Based on the EBA QIS, and COREP data, the amount of physically traded commodities reported by the banks was found to be negligible when compared with the market volumes. Also, the requirement for stable funding generated by these assets is limited in comparison with the total amount of required stable funding;  a reduction of the weighting factor assigned to these assets would have limited impact on the banks and, in particular, it would not make the NSFR less stringent. In conclusion, there is no evidence that the efforts made by the banking system since the announcement of the new prudential standard in 2010 to comply with newly introduced liquidity requirements have had a material impact on the markets for precious metals.

     

    Related Links

    Keywords: Europe, EU, Banking, CRR2, Basel, NSFR, COREP, QIS, Liquidity Risk, BCBS, EBA

    Featured Experts
    Related Articles
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance on Management of Climate Change Risks

    The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.

    November 26, 2021 WebPage Regulatory News
    News

    EBA Publishes Single Rulebook Q&A Updates in November 2021

    The European Banking Authority (EBA) Single Rulebook Question and Answer (Q&A) tool updates for this month include answers to 10 questions.

    November 26, 2021 WebPage Regulatory News
    News

    EC Proposes New Measures Under Capital Markets Union Package

    The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.

    November 25, 2021 WebPage Regulatory News
    News

    European Council Adopts Position on Digital Finance Package Proposals

    The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).

    November 25, 2021 WebPage Regulatory News
    News

    PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window

    The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.

    November 25, 2021 WebPage Regulatory News
    News

    FED Outlines Lending Conditions and Supervisory Activities in H1 2021

    The Board of Governors of the Federal Reserve System (FED) published a report that summarizes banking conditions in the United States, along with the supervisory and regulatory activities of FED.

    November 24, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards to Calculate Risk-Weights of CIUs Under CRR

    The European Banking Authority (EBA) published the final report on draft regulatory technical standards for the calculation of risk-weighted exposure amounts of collective investment undertakings or CIUs, in line with the Capital Requirements Regulation (CRR).

    November 24, 2021 WebPage Regulatory News
    News

    APRA Expects Boards to Strengthen Ability to Oversee Cyber Resilience

    The Australian Prudential Regulation Authority (APRA) recently completed two pilot initiatives in its 2020-2024 Cyber Security Strategy, which was published in November 2020.

    November 23, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7736