EBA Issues Opinion on Measures to Address Macro-Prudential Risk
EBA published an opinion following the notification by the Finnish Financial Supervisory Authority (FIN-FSA) of its intention to modify capital requirements to address an increase in macro-prudential risk, based on Article 458 of the Capital Requirements Regulation (CRR). This opinion is addressed to the Council, the EC, and the FIN-FSA.
FIN-FSA has notified EBA about its intention to introduce a credit institution-specific minimum level of 15% for the average risk-weight on residential mortgage loans applicable to credit institutions that have adopted the internal ratings-based (IRB) approach. In line with the warning issued by ESRB on the vulnerabilities of the residential real estate sector, the EBA opinion acknowledges the macro-prudential risks in the Finnish economy related to residential mortgage loans and residential mortgage indebtedness. In addition, EBA sees some open questions regarding the choice of measure, the calibration of the measure, and the impact of the measure, to bring to the attention of the EC.
Related Link: Opinion on Macro-Prudential Measures (PDF)
Keywords: Europe, Finland, Banking, CRR, Residential Mortgage Loans, FIN-FSA, EBA
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