EBA Proposes to Remove NOK from Constraint List for LCR Calculation
The European Banking Authority (EBA) proposed to amend the implementing technical standards on currencies with constraints on the availability of liquid assets in the context of the liquidity coverage ratio (LCR). The proposed amendments remove Norwegian Krone (NOK) from the list of currencies with constraints and, consequently, no currency will be recognized as having constraints on the availability of liquid assets. The consultation period ends on October 16, 2021. The final amending implementing technical standards are foreseen to be submitted to the European Commission by the end of the year.
EBA has been also tasked to amend the existing regulatory technical standards specifying the use of derogations and the conditions of their application following the addition of a new derogation, with a concomitant need to update the corresponding implementing technical standards on the effective list of currencies with constraints, which currently consists of one single currency, the Norwegian Krone. EBA is proposing to remove the Norwegian Krone from the list of currencies with constraints because an updated data analysis demonstrates that there is no longer a shortage in the supply of liquid assets in the Norwegian Krone. Since this amendment will lead to an empty list, to keep its regulatory efforts proportionate to their impact, EBA will not update the corresponding regulatory technical standards. Such an update will be proposed if during a future assessment EBA observes that a currency will have to be added to the list.
As part of this consultation, the draft implementing technical standards have been developed on the basis of the Capital Requirements Regulation (CRR), as amended by the revised CRR, which mandates EBA to list the currencies with constraints on the availability of liquid assets and specify the derogations and conditions of their application. The implementing technical standards are to be read in conjunction with the regulatory technical standards (Commission Delegated Regulation 2016/709) stemming from an EBA mandate in Article 419(5) of the CRR.
Comment Due Date: October 16, 2021
Keywords: Europe, EU, Banking, LCR, CRR, Norwegian Krone, NOK, Implementing Technical Standards, Liquidity Risk, Basel, EBA
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous ArticleBCBS Publishes Basel III Monitoring Updates in July 2021
ECB Finds Banks Unprepared for Pillar 3 Climate Risk Disclosures
The European Central Bank (ECB) published results of the 2022 supervisory assessment of climate-related and environmental risk disclosures among significant institutions (103) and a selected number of less significant institutions (28).
NCUA Assesses Credit Union Exposure to Climate-Related Physical Risks
The National Credit Union Administration (NCUA) released a Research Note that examines the exposure of credit unions to climate-related physical risks. In a related development
EBA Issues Multiple Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) is seeking comments, until July 31, 2023, on the draft Guidelines on the proposed common approach to the resubmission of historical data under the EBA reporting framework.
EC Adopts Regulation on Own Funds, Issues Other Updates
The European Commission adopted Delegated Regulations on own funds and eligible liabilities, on requirements for the internal methodology under the internal default risk model
CDP Platform to Report Plastic-Related Impact, Issues Other Updates
The Carbon Disclosure Project (CDP) announced that its global environmental disclosure platform has enabled reporting on plastic-related impact for nearly 7,000 companies worldwide
IASB to Enhance Reporting of Climate Risks, Proposes IFRS 9 Amendments
The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements,
BIS Addresses Data Gaps and Macro-Prudential Policy for Climate Risks
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a brief paper that examines challenges associated with the use of macro-prudential policies to address climate-related financial risks.
FCA Sets Out Business Plan, Launches TechSprint on Greenwashing
The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets
UK Committee Sets Out Recommendations for Next Phase of Open Banking
The Joint Regulatory Oversight Committee (JROC), comprising the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) as co-chairs and the HM Treasury and the Competition and Markets Authority (CMA) as members
ECB Publishes Multiple Regulatory Updates for Banking Institutions
The European Central Bank (ECB) published the results of the 2022 climate risk stress test of the Eurosystem balance sheet,