- Question ID
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2013_280
- Legal act
- Regulation (EU) No 575/2013 (CRR)
- Topic
- Liquidity risk
- Article
-
416, 417, 509
- Paragraph
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3, c, 5(c )
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
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NA
- Type of submitter
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Credit institution
- Subject matter
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Assets controlled by a liquidity management function
- Question
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Would only those assets which are directly controlled by the liquidity management function fall within the definition of liquid asset holdings (subject to meeting the other conditions) under Regulation (EU) No 575/2013 (CRR), or do those assets which are not directly controlled by the liquidity management function also qualify?
- Background on the question
-
The institution's liquidity management function has full access to the unencumbered position of the bank in moments of stress, although the positions might not sit within a Treasury (liquidity management function) department.
- Submission date
- Final publishing date
-
- Final answer
-
Article 417(c) of Regulation (EU) No. 575/2013 (CRR) states that liquid assets, which fulfil the conditions set out in Article 416(3), shall be controlled by a liquidity management function.
In order to ensure effective monetisation in case liquidity outflows have to be met through the liquidation of liquid assets, these need to be under the control of a liquidity management function. In this respect larger institutions may have more than one such function. Such a function should have the continuous authority, and legal and operational capability, to monetise any asset in the stock in case needed and the proceeds shall be readily available to the function.
Further, under Article 509(5)(c) of the CRR, the EBA published a report on the operational requirements for the holdings of liquid assets which concludes in a similar way that assets of extremely high and high liquidity and credit quality do not have to be held in a separate book to fulfil this operational requirement.
- Status
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Final Q&A
- Answer prepared by
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Answer prepared by the EBA.
- Note to Q&A
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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.
Disclaimer
The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.