Featured Product

    ESRB Releases Report on Approaching NPLs from A Macro-Prudential Angle

    October 01, 2018

    ESRB published a report of the Advisory Scientific Committee (ASC) on approaching nonperforming loans (NPLs) from a macro-prudential angle. This ASC report is intended to contribute to the mandate assigned to ESRB, by elaborating on the foundations for policy action in the NPL domain and some of the key elements and principles relevant for designing the policy package from a macro-prudential perspective.

    The report first identifies the imperfections (externalities, economies of scale and coordination failures, institutional distortions and moral hazard vis-à-vis the safety net) that call for policy action in relation to the NPL problem. Special emphasis is placed on the mechanisms that can turn this into a macro-prudential problem. The report then establishes a mapping between the imperfections identified and the list of potential preventive and corrective policies in relation to NPLs and discusses the policy trade-offs that are relevant from a macro-prudential perspective. It concludes with a further elaboration of the trade-offs and policies that need to be taken into account in determining the optimal speed and form of resolution of NPLs once they have been accumulated.

    The accumulation of NPLs on the balance sheets of EU banks in the aftermath of the global financial crisis has caught the attention of European authorities in the last few years. NPLs become an issue of macro-prudential concern if they are a source of systemic risk and a threat to financial stability. The policy considerations in this report are meant to contribute to the ongoing policy discussions and should not be regarded as specific proposals for formal ESRB warnings or recommendations.

     

    Related Link: Report (PDF)

     

    Keywords: Europe, EU, Banking, NPLs, Macro-Prudential Policy, Systemic Risk, ESRB 

    Featured Experts
    Related Articles
    News

    BCBS Consults on Revised Disclosures for Market Risk Framework

    BCBS launched a consultation on the revised disclosure requirements for the market risk framework for banks.

    November 14, 2019 WebPage Regulatory News
    News

    BCBS Consults on Disclosure Templates of Sovereign Exposures of Banks

    BCBS published a consultation on the voluntary disclosure templates related to sovereign exposures of banks.

    November 14, 2019 WebPage Regulatory News
    News

    PRA Publishes Final Policy on Maintenance of TMTP Under Solvency II

    PRA published the policy statement (PS25/19) that contains the final supervisory statement (SS6/16) on maintenance of the transitional measure on technical provisions (TMTPs) under Solvency II.

    November 14, 2019 WebPage Regulatory News
    News

    FSB Examines Implementation of Resolution Regimes in Financial Sector

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions and sets out plans for further work.

    November 14, 2019 WebPage Regulatory News
    News

    IAIS Adopts ComFrame, ICS, and Holistic Framework for Systemic Risk

    IAIS adopted a comprehensive set of reforms—Common Framework (ComFrame), Insurance Capital Standard (ICS) Version 2.0, and Holistic Framework for Systemic Risk—that will enable effective cross-border supervision of insurance groups and contribute to global financial stability.

    November 14, 2019 WebPage Regulatory News
    News

    PRA Publishes Templates for Statistical Disclosures Under Solvency II

    PRA published templates for statistical disclosures, as required under Article 31(2) of the Solvency II Directive.

    November 14, 2019 WebPage Regulatory News
    News

    EC Rule on Calculation of Technical Provisions Under Solvency II

    EC published the Implementing Regulation (EU) 2019/1902 that lays down technical information for calculation of technical provisions and basic own funds for reporting with reference dates from September 30, 2019 until December 30, 2019, in accordance with the Solvency II Directive.

    November 14, 2019 WebPage Regulatory News
    News

    Regulatory Authorities Remark on IAIS Reforms for Insurance Sector

    FSB welcomed the finalization of the IAIS holistic framework for systemic risk in the insurance sector, for implementation in 2020. EIOPA welcomed the adoption of ComFrame, Insurance Capital Standard (ICS) Version 2.0, and the holistic framework for the assessment and mitigation of systemic risk in the insurance sector.

    November 14, 2019 WebPage Regulatory News
    News

    BIS and MAS Launch Innovation Hub in Singapore

    BIS and MAS launched the BIS Innovation Hub Center in Singapore.

    November 13, 2019 WebPage Regulatory News
    News

    FASB Approves Guidance to Assist in Transition to New Reference Rates

    FASB approved an Accounting Standards Update (Topic 848) to provide temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the reference rate reform on financial reporting.

    November 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4147