Featured Product

    EBA Issues Advice on Review of Macro-Prudential Framework

    In response to the European Commission Call for Advice on the review of macro-prudential framework, the European Banking Authority (EBA) proposed a set of recommendations to simplify the procedures around existing macro-prudential tools and enhance harmonization for other tools.

    As part of the review, in June 2021, the European Commission had issued a request to the EBA, European Systemic Risk Board (ESRB), and the European Central Bank (ECB) for advice on the overall design and functioning of the buffer framework, missing or obsolete instruments, internal market considerations, and global risks. EBA highlighted the need for targeted changes to make the macro-prudential framework more effective and to improve the functioning of the Single Market, thus proposing the following recommendations:

    • Rebuild regulatory capital buffers to sufficient levels so that they can be released when needed again in the future
    • Maintain clear roles and responsibilities of the different authorities involved in micro-prudential and macro-prudential policies as well as close coordination between them
    • Postpone the assessment of interaction between the input and output floors and the macro-prudential measures to the next review of the macro-prudential toolkit, as the input and output floors were recently introduced in the Basel III standard and are yet to be fully applicable
    • Include a legal mandate in the Capital Requirements Directive (CRD) to develop methodologies covering both the identification of other systemically important institutions (O-SIIs) and the setting of buffer rates
    • Simplify the text of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR) around governance procedures for some macro-prudential measures
    • Undertake a comprehensive evaluation of the interaction of macro-prudential measures with other capital requirements, such as leverage ratio, own funds, and eligible liabilities (MREL) requirements, in light of the implementation of the new elements introduced in the revised regime (constituting CRR2, CRD5, and the revised Bank Recovery and Resolution Directive) 
    • Perform further assessments on the ability of current macro-prudential tools to address environmental risks, crypto assets, and cyber security risks
    • Establish an oversight and monitoring system for non-bank lenders and enlarge the scope of the macro-prudential framework to cover non-bank lenders (which include fintech lenders and peer-to-peer lending platforms)

    Article 513 of the CRR requires the European Commission to complete a review of the macro-prudential provisions in the CRR and CRD by June 2022 and, if appropriate, to submit a legislative proposal to the European Parliament and to the Council by December 2022. The European Commission has also launched a consultation to gather other stakeholder views and experience with the current macro-prudential rules.

     

    Related Links

     

    Keywords: Europe, EU, Banking, Macro-Prudential Framework, Basel, Regulatory Capital, ESG, Climate Change Risk, MREL, Macro-Prudential Policy, CRD, CRR, Crypto-Assets, Cyber Risk, Reporting, Systemic Risk, EBA, Subheadline

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    News

    UK Authorities Issue Regulatory and Reporting Updates for Banks

    The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.

    June 15, 2022 WebPage Regulatory News
    News

    BCBS Issues Climate Risk Principles while HKMA Expresses Its Support

    The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.

    June 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8286