How should payment commitments pursuant to Article 103(3) BRRD (Directive 2014/59/EU) be treated in the capital requirements for credit risk?
According to Article 103 (3) BRRD the financing of resolution funds may include irrevocable payment commitments by the institutions. Payment commitments should be fully backed by collateral of low risk assets unencumbered by any third-party rights, at the free disposal and earmarked for the exclusive use by the resolution authorities. The decision to collect the payment commitments is the responsibility of the relevant resolution authority, not only depending on the creditworthiness of the institutions authorised in their territory. In the Regulation (EU) No 575/213 - CRR with regard to capital requirements for credit risk there are no provisions regarding the treatment of such payment commitments.
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