Question ID
2013_294
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Liquidity risk
Article
416
Paragraph
1
Subparagraph
(c)(i)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
N/A
Name of institution / submitter
European Banking Federation
Country of incorporation / residence
Belgium
Type of submitter
Industry association
Subject matter
Member States government bonds
Question

Can the EBA confirm that all Member States government bonds are defined as liquid assets and not excluded if their credit quality is low e.g. would Greek government debt be eligible currently? It is our understanding where you have foreign currency liabilities they can be matched with sovereign bonds in that currency. But in the EU are all Euro sovereign bonds equally eligible as liquid assets or do they need to fulfil also the eligibility criteria in Art 416 (1) (b)?

Background on the question

To ensure consistency of application and a level-playing field

Submission date
Final publishing date
Final answer
In accordance with Article 415(1) of Regulation (EU) No 575/2013 (CRR), Article 416 specifies the liquidity reporting obligation until the liquidity coverage requirement is fully specified and implemented in accordance with Article 460. Commission Delegated Regulation (EU) 2015/61 adopted in accordance with Article 460, specifies in detail the general liquidity coverage requirement established by Article 412(1) of CRR and is applicable from 1 October 2015. Article 10(1)(c)(i) of the Delegated Regulation (EU) 2015/61 considers all assets representing claims on or guaranteed by the central government of a Member State to be eligible as Level 1 assets. Article 17(1) of the Delegated Regulation establishes no maximum percentage of the liquidity buffer for Level I assets excluding extremely high quality covered bonds referred to in Article 10(1)(f). Article 6(b) of the Delegated Regulation provides that to be eligible to form part of a credit institution's liquidity buffer, the liquid assets shall comply with the operational requirements laid down in Article 8. Paragraph 1 of that Article provides that credit institutions shall have policies and limits in place to ensure that the holdings of liquid assets comprising their liquidity buffer remain appropriately diversified at all times. The competent authorities may not impose specific restrictions or requirements on Government bonds issued by a Member State to ensure compliance with the requirement set out in Article 8(1) where the conditions in Article 8(1)(b) are satisfied. DISCLAIMER This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Financial Stability, Financial services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.
Status
Final Q&A
Answer prepared by
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Note to Q&A

Update 26.03.2021: This Q&A has not yet been reviewed by the European Commission in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR).

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.