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
Previous ArticleBCBS Publishes Basel III Monitoring Updates in July 2021
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.