Question ID
2023_6749
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Supervisory reporting - Asset Encumbrance
Article
430
Paragraph
1
Subparagraph
g
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) 2021/451 – ITS on supervisory reporting of institutions
Article/Paragraph
19
Type of submitter
Credit institution
Subject matter
Central bank eligibility of cash
Question

Should cash be reported as central bank eligible in F 32.01 (AE-ASS) if a bank can borrow securities against cash from the central bank?

Background on the question

By borrowing money from the central bank (CB) with a security as collateral, a bank can obtain additional liquidity. By borrowing securities from the CB with cash as collateral, a bank decreases its liquidity, hence reporting cash as CB eligible seems counterintuitive in the context of liquidity and asset encumbrance reporting. Given divergent guidance on the CB eligibility of cash in different reporting templates (see details below) and unclear prudential rationale for reporting cash as CB eligible, we would like the EBA to confirm whether cash should be reported as CB eligible.

There is no harmonized approach to reporting of the central bank (CB) eligibility of cash across different reporting templates:

  • F 32.01 (Q&A 2017_3619): sight or term deposits at the CB should be treated as CB eligible only if they are accepted as collateral by the CB;
  • C71 (Q&A 2019_4818): CB deposits may be reported as “CB eligible” if these deposits can be withdrawn during stress period (the answer implies that the “full amount” of not CB eligible deposits may be reported as CB eligible in C71 as long as they can be withdrawn during stress);
  • C 66 (Q&A 2020_5646): withdrawable CB reserves (cash at CB) should not be reported as CB eligible (row 1230), even if they are CB eligible.
Submission date
Final publishing date
Final answer

Annex XVII chapter 2.1.3 defines central bank eligibility as “assets held by the reporting institution which are eligible for operations with those central banks to which the reporting institution has access”. Thus, assets in general, should be treated as central bank eligible only if they are accepted as collateral by the central bank.

In line with its statute, the Eurosystem provides credit only against adequate collateral. Typically, collateral refers to marketable financial securities, such as bonds, or other types of assets, such as non-marketable assets or cash.

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.

Disclaimer

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