Featured Product

    ECB Opinion on Liquidity Assistance by Bank of Lithuania Amid COVID-19

    March 30, 2020

    ECB published an opinion on the provision of emergency liquidity assistance by Bank of Lithuania. The opinion was issued in response to a request from the Bank of Lithuania for an opinion on a draft law. The purpose of the draft law is to enable Bank of Lithuania to extend emergency liquidity assistance (ELA) beyond only credit institutions to a broader range of financial institutions experiencing temporary liquidity problems. The flexibility of the provision of emergency liquidity assistance by Bank of Lithuania (introduced in the draft law) is of particular relevance in context of the ongoing COVID-19 pandemic.

    The draft law expands the range of institutions to which Bank of Lithuania may grant loans secured by adequate collateral, in accordance with the terms and conditions established by Bank of Lithuania, to include financial institutions and insurance and reinsurance undertakings. ECB welcomes that the draft law confirms that emergency liquidity assistance should be provided without prejudice to the requirements derived from Bank of Lithuania’s participation in the ESCB. ECB notes the possibility under the draft law for Bank of Lithuania to provide emergency liquidity assistance to non-bank financial institutions in Lithuania experiencing liquidity problems. This inclusion of financial institutions in the list of potential emergency liquidity assistance recipients is consistent with the Eurosystem Agreement on emergency liquidity, which explicitly refers to the possible provision of emergency liquidity assistance by a national central bank to a financial institution or a group of financial institutions facing liquidity problems. 

    In view of compliance with the monetary financing prohibition under Article 123 of the Treaty, it is reiterated that emergency liquidity assistance may only be extended to illiquid but solvent credit institutions or financial institutions. With regard to financial independence, ECB recalls that a national central bank within the ESCB is required to have sufficient financial resources not only to perform its ESCB-related tasks but also its national tasks, including the provision of emergency liquidity assistance. Member states may not put their national central banks in a position where they have insufficient financial resources and inadequate net equity to carry out their ESCB or Eurosystem-related tasks, as applicable. Losses incurred by an national central bank in the exercise of its national tasks could negatively impact the exercise of ESCB-related tasks. 


    Related Link: ECB Opinion (PDF)


    Keywords: Europe, Lithuania, Banking, Insurance, Securities, COVID-19, Emergency Liquidity Assistance, Bank of Lithuania, ESCB, ECB

    Featured Experts
    Related Articles

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8597