Final draft adopted by the EBA and submitted to the European Commission
These technical standards (ITS and RTS) draw a list of currencies featuring constraints on the availability of liquid assets and specify the derogations that could be applied to such currencies to address the inherent difficulties that institutions would face in meeting their liquidity coverage requirement even in spite of a sound liquidity management.
The European Banking Authority (EBA) launched today a public consultation on amendments to its Implementing Technical Standards (ITS) on currencies with constraints on the availability of liquid assets in the context of the liquidity coverage ratio (LCR). The proposed amendments remove the Norwegian Krone (NOK) from the list, with the result that no currency will be recognised as having constraints on the availability of liquid assets. The consultation runs until 16 October 2021.
Article 419 of the Capital Requirements Regulation (CRR) specifies a number of derogations applicable to currencies with constraints on the availability of liquid assets for the purpose of the calculation of the LCR. An additional derogation was added as part of the Risk Reduction Measures (RRM) package adopted by the European legislators.
The EBA has been tasked to amend the existing Regulatory Technical Standards (RTS) 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 ITS on the effective list of currencies with constraints, which currently consists of one single currency, the NOK.
Based on the updated data analysis, which demonstrates that there is no longer a shortage in the supply of liquid assets in the NOK currency, the EBA proposes to amend the ITS by removing NOK from the list. Since this amendment will lead to an empty list, in order to keep its regulatory efforts proportionate to their impact, the EBA will not update the corresponding RTS. Such an update will be proposed if during a future assessment the EBA observes that a currency will have to be added to the list.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 16 October 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
These draft ITS have been developed on the basis of Article 419 of Regulation (EU) No 575/2013 of the European Parliament and of the Council), as amended by Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019, which mandates the Authority to list the currencies with constraints on the availability of liquid assets and specify the derogations and conditions of their application.
The European Banking Authority (EBA) launched today three consultations on draft technical standards (ITS and RTS) related to liquidity requirements. In particular, the EBA will be consulting on 1) draft ITS on currencies for which the justified demand for liquid assets exceeds their availability; 2) draft RTS on derogations for eligible currencies; and 3) draft ITS listing the currencies with an extremely narrow definition of central bank eligibility. All three consultations will run until 22 December 2013.
Key features of the three draft technical standards
The draft implementing technical standard (ITS) on currencies for which the justified demand for liquid assets exceeds their availability aim at drawing a list of currencies featuring constraints on the availability of liquid assets. The list has been compiled on the basis of data gathered by Member States. In particular, the data collection has been completed for two currencies: the Norwegian krone (NOK) and the Danish krone (DKK). This list of currencies with constraints will be revised once a final definition of liquid assets is available at EU level.
The draft regulatory technical standards (RTS) on derogations for eligible currencies aim at specifying the derogations that could be applied to those currencies facing constraints on the availability of liquid assets. These standards aim to address the inherent difficulties that institutions would face in meeting their liquidity coverage requirement even in spite of a sound liquidity management. Although the RTS try to discourage, to the extent possible, the use of derogations, these may have to be applied in those circumstances where an institution can prove that, despite all mitigating actions undertaken, the need for liquid assets remains. Institutions willing to apply such derogations will, amongst other conditions, have to notify competent authorities and to provide detailed information 30 days prior to the initial use of the derogation.
The draft implementing technical standards (ITS) on currencies with an extremely narrow definition of central bank eligibility aim at drawing a list of currencies in which only central government debt or debt issued by the central bank is eligible as collateral for standard liquidity operations at the central bank. Based on this definition, as well as on the information provided by Member States, only the Bulgarian leva appears to have extremely narrow central bank eligibility.
Comments can be sent to the EBA by clicking on the "send your comments" button on the consultation page of each of the three consultations. Please note that the deadline for the submission of comments is 22 December 2013.
All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing for the three consultations will take place at the EBA premises on 19 November from 14:00 to 17:00 UK time.
The proposed draft ITS and RTS have been developed on the basis of Regulation 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms.
The EBA is expected to submit these draft ITS and RTS by 31 March 2014.
The European Banking Authority (EBA) issued today an Opinion to the European Commission supporting its proposed amendments to the EBA final draft ITS on currencies featuring constraints on the availability of liquid assets. The EBA agrees with removing from its ITS the Danish Krone (DKK) as a currency for which there are insufficient liquid assets and supports the amendments to the recitals that justify why the Norwegian Krone (NOK) still qualifies as a currency with such constraints.
The final draft ITS submitted by EBA on 27 March 2014 included the Danish Krone (DKK) and the Norwegian Krone (NOK) as currencies for which there were insufficient liquid assets. The analysis conducted by the EBA took into consideration the international standard on liquidity coverage ratio (LCR), published by the Basel Committee of Banking Supervision's (BCBS). The Commission, from its side, delayed its assessment of the EBA's final draft ITS as it was waiting to adopt its Delegated Act on LCR setting out rules on what assets can be considered as high quality liquid assets (HQLA). This Delegated Act, which deviates from the BCBS' standard, namely with regard to the HQLA definition, has prompted the Commission to seek advice from the EBA.
The EBA has, therefore, amended the ITS on the basis of the Commission's proposed changes and resubmitted the standard in the form of a formal Opinion.
In particular, in view of the treatment allowed for covered bonds in the Commission's Delegated Act, the EBA supports the Commission's proposal to remove from the ITS the DKK as a currency for which there are insufficient liquid assets. In addition, the EBA is of the opinion that the existing percentage derogation for the NOK should not be amended as it is not possible to carry out, within a short timeline and without causing further delays to the entry into force of the ITS, a new analysis to confirm the appropriate percentage, in particular due to the unavailability of detailed data on the impact of the changes introduced in the Delegated Act. However, the EBA intends to repeat, in the future, its analysis to update the list of currencies and their related shortages.
The final draft Implementing Technical Standards (ITS) on currencies with constraints on the availability of liquid assets have been developed according to Article 419(4) of the Capital Requirements Regulation (CRR) and were submitted to the Commission for endorsement on 27 March 2014.
On 11 May 2015, the Commission informed the EBA that in accordance with the procedure set out in the fourth and fifth subparagraphs of Article 15(1) of Regulation (EU) No 1093/2010, it intended to amend the final draft ITS submitted by the EBA.
On 10 October 2014, the Commission adopted its Delegated Act on the LCR (Delegated Regulation (EU) 2051/61).
The EBA's competence to deliver an opinion is based on the fifth subparagraph of Article 15(1) of Regulation (EU) No 1093/2010. In accordance with Article 14(5) of the Rules of Procedure of the Board of Supervisors, the Board of Supervisors adopted this Opinion.
The European Banking Authority (EBA) published today its final draft Implementing and Regulatory Technical Standards (ITS and RTS) related to liquidity requirements. The package includes: (i) final draft ITS on currencies for which the justified demand for liquid assets exceeds their availability; (ii) final draft RTS on derogations for eligible currencies; and (iii) final draft ITS listing the currencies with an extremely narrow definition of central bank eligibility. These final draft Technical Standards will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in the European Union (EU) and namely at strengthening its resilience against liquidity risk.
The final draft ITS on currencies for which the justified demand for liquid assets exceeds their availability aim at drawing a list of currencies that have constraints on the availability of liquid assets. The list has been compiled on the basis of data gathered by EU Member States. In particular, the data collection has been completed for two currencies: the Norwegian krone (NOK) and the Danish krone (DKK). This list of currencies with constraints will be revised once a final definition of liquid assets is available at EU level.
The final draft RTS on derogations for eligible currencies aim at specifying the derogations that could be applied to those currencies facing constraints on the availability of liquid assets. These standards aim at addressing the inherent difficulties that institutions would face in meeting their liquidity coverage requirement even in spite of a sound liquidity management. Although the RTS try to discourage, to the extent possible, the use of derogations, these may have to be applied in those circumstances where an institution can prove that, despite all mitigating actions undertaken, the need for liquid assets remains. Institutions willing to apply such derogations will, amongst other conditions, have to notify competent authorities and provide detailed information 30 days prior to the initial use of the derogation.
The final draft ITS on currencies with an extremely narrow definition of central bank eligibility aim at drawing a list of currencies in which only central government debt or debt issued by the central bank is eligible as collateral for standard liquidity operations at the central bank. Based on this definition, as well as on the information provided by Member States, only the Bulgarian lev (BGN) appears to have extremely narrow central bank eligibility.
These final RTS and ITS have been developed in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 (CRR) on prudential requirements for credit institutions and investment firms.
The final standards have been sent today to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.
The European Banking Authority (EBA) launched today three consultations on draft technical standards (ITS and RTS) related to liquidity requirements. In particular, the EBA will be consulting on 1) draft ITS on currencies for which the justified demand for liquid assets exceeds their availability; 2) draft RTS on derogations for eligible currencies; and 3) draft ITS listing the currencies with an extremely narrow definition of central bank eligibility. All three consultations will run until 22 December 2013.
The draft implementing technical standard (ITS) on currencies for which the justified demand for liquid assets exceeds their availability aim at drawing a list of currencies featuring constraints on the availability of liquid assets. The list has been compiled on the basis of data gathered by Member States. In particular, the data collection has been completed for two currencies: the Norwegian krone (NOK) and the Danish krone (DKK). This list of currencies with constraints will be revised once a final definition of liquid assets is available at EU level.
The draft regulatory technical standards (RTS) on derogations for eligible currencies aim at specifying the derogations that could be applied to those currencies facing constraints on the availability of liquid assets. These standards aim to address the inherent difficulties that institutions would face in meeting their liquidity coverage requirement even in spite of a sound liquidity management. Although the RTS try to discourage, to the extent possible, the use of derogations, these may have to be applied in those circumstances where an institution can prove that, despite all mitigating actions undertaken, the need for liquid assets remains. Institutions willing to apply such derogations will, amongst other conditions, have to notify competent authorities and to provide detailed information 30 days prior to the initial use of the derogation.
The draft implementing technical standards (ITS) on currencies with an extremely narrow definition of central bank eligibility aim at drawing a list of currencies in which only central government debt or debt issued by the central bank is eligible as collateral for standard liquidity operations at the central bank. Based on this definition, as well as on the information provided by Member States, only the Bulgarian leva appears to have extremely narrow central bank eligibility.
Comments can be sent to the EBA by clicking on the "send your comments" button on the consultation page of each of the three consultations. Please note that the deadline for the submission of comments is 22 December 2013.
All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing for the three consultations will take place at the EBA premises on 19 November from 14:00 to 17:00 UK time.
The proposed draft ITS and RTS have been developed on the basis of Regulation 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms.
The EBA is expected to submit these draft ITS and RTS by 31 March 2014.
The European Banking Authority (EBA) launched today three consultations on draft technical standards (ITS and RTS) related to liquidity requirements. In particular, the EBA will be consulting on 1) draft ITS on currencies for which the justified demand for liquid assets exceeds their availability; 2) draft RTS on derogations for eligible currencies; and 3) draft ITS listing the currencies with an extremely narrow definition of central bank eligibility. All three consultations will run until 22 December 2013.
The draft implementing technical standard (ITS) on currencies for which the justified demand for liquid assets exceeds their availability aim at drawing a list of currencies featuring constraints on the availability of liquid assets. The list has been compiled on the basis of data gathered by Member States. In particular, the data collection has been completed for two currencies: the Norwegian krone (NOK) and the Danish krone (DKK). This list of currencies with constraints will be revised once a final definition of liquid assets is available at EU level.
The draft regulatory technical standards (RTS) on derogations for eligible currencies aim at specifying the derogations that could be applied to those currencies facing constraints on the availability of liquid assets. These standards aim to address the inherent difficulties that institutions would face in meeting their liquidity coverage requirement even in spite of a sound liquidity management. Although the RTS try to discourage, to the extent possible, the use of derogations, these may have to be applied in those circumstances where an institution can prove that, despite all mitigating actions undertaken, the need for liquid assets remains. Institutions willing to apply such derogations will, amongst other conditions, have to notify competent authorities and to provide detailed information 30 days prior to the initial use of the derogation.
The draft implementing technical standards (ITS) on currencies with an extremely narrow definition of central bank eligibility aim at drawing a list of currencies in which only central government debt or debt issued by the central bank is eligible as collateral for standard liquidity operations at the central bank. Based on this definition, as well as on the information provided by Member States, only the Bulgarian leva appears to have extremely narrow central bank eligibility.
Comments can be sent to the EBA by clicking on the "send your comments" button on the consultation page of each of the three consultations. Please note that the deadline for the submission of comments is 22 December 2013.
All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing for the three consultations will take place at the EBA premises on 19 November from 14:00 to 17:00 UK time.
The proposed draft ITS and RTS have been developed on the basis of Regulation 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms.
The EBA is expected to submit these draft ITS and RTS by 31 March 2014.