Austrian Federal Economic Chamber, Division Bank and Insurance
We deem the ITS methodology for determining the list of currencies for which the demand of liquid assets exceeds their availability and the shortage percentage as appropriate.
The RTS specifies additional conditions which the banks which would like to make use of one of the 2 derogations shall comply with. In our view, those conditions are also acceptable.
We see it a critical fact of the ITS that the assessment has been performed for 2 currencies only. From our point of view it is important that the EBA makes an additional effort to gather data and perform a thorough assessment for all CESEE currencies.
Our expectation is that liquid assets denominated in some of the CESEE currencies will also turn out to be short of the estimated demand. Firstly, this can be due to the fact that the local CESEE debt and equity markets are rather undeveloped, i.e. are not „deep” and the traded volume is very low. Secondly, the volume of domestic currency denominated government bonds in these countries is rather low. Thirdly, due to the pension system reform in most CESEE countries, a great part of the locally issued government bonds is bought by local pension funds, which means that it is locked-up.
Generally, we see that banks in Denmark and Norway will gain advantage compared to banks operating in other jurisdictions like most of the CEE and SEE countries, where the demand for liquid assets is expected to exceed the supply of liquid assets in domestic currency. Therefore, we highly appeal that EBA invests much effort in additional surveys to cover all EU currencies, especially all CESEE currencies in its ITS in order to ensure a „level playing field” to all banks within EU which have to cope with the problem of liquid asset shortage. We want to remind EBA that ensuring a „level playing field” is one of the key functions and initial reasons for its foundation and ongoing existence.