2013_293 Minimum reserve requirement | European Banking Authority

Question ID:: 2013_293
Legal Act:: Regulation (EU) No 575/2013 (CRR)
Topic:: Liquidity risk
Article:: 412
Paragraph:: 1
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:: Not applicable
Article/Paragraph:: na
Disclose name of institution / entity:: Yes
Name of institution / submitter:: European Banking Federation
Country of incorporation / residence:: Belgium
Type of submitter:: Industry association
Subject Matter:: Minimum reserve requirement
Question:: What is the requirement to maintain the minimum reserve requirement within the LCR period, i.e. does the LCR have to be met for each of the 30 days in the stress horizon?
Background on the question:: NA
Date of submission:: 30/09/2013
Published as Final Q&A:: 04/07/2014
Final Answer:: In accordance with Article 412(1) of Regulation (EU) No. 575/2013 (CRR) institutions shall hold liquid assets, the sum of the values of which covers the liquidity outflows less the liquidity inflows under stressed conditions so as to ensure that institutions maintain levels of liquidity buffers which are adequate to face any possible imbalance between liquidity inflows and outflows under gravely stressed conditions over a period of 30 days. As a consequence, the liquidity coverage requirement shall apply at all times. During times of stress, institutions may use their liquid assets to cover their liquidity outflows in accordance with the circumstances specified in Article 414 of the CRR.
Status:: Final Q&A
Answer prepared by:: Answer prepared by the EBA.
Note to Q&A:: Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.