12 June 2015
The European Banking Authority (EBA) issued today an Opinion to the European Commission supporting its proposed amendments to the EBA final draft ITS on currencies featuring constraints on the availability of liquid assets. The EBA agrees with removing from its ITS the Danish Krone (DKK) as a currency for which there are insufficient liquid assets and supports the amendments to the recitals that justify why the Norwegian Krone (NOK) still qualifies as a currency with such constraints.
The final draft ITS submitted by EBA on 27 March 2014 included the Danish Krone (DKK) and the Norwegian Krone (NOK) as currencies for which there were insufficient liquid assets. The analysis conducted by the EBA took into consideration the international standard on liquidity coverage ratio (LCR), published by the Basel Committee of Banking Supervision's (BCBS). The Commission, from its side, delayed its assessment of the EBA's final draft ITS as it was waiting to adopt its Delegated Act on LCR setting out rules on what assets can be considered as high quality liquid assets (HQLA). This Delegated Act, which deviates from the BCBS' standard, namely with regard to the HQLA definition, has prompted the Commission to seek advice from the EBA.
The EBA has, therefore, amended the ITS on the basis of the Commission's proposed changes and resubmitted the standard in the form of a formal Opinion.
In particular, in view of the treatment allowed for covered bonds in the Commission's Delegated Act, the EBA supports the Commission's proposal to remove from the ITS the DKK as a currency for which there are insufficient liquid assets. In addition, the EBA is of the opinion that the existing percentage derogation for the NOK should not be amended as it is not possible to carry out, within a short timeline and without causing further delays to the entry into force of the ITS, a new analysis to confirm the appropriate percentage, in particular due to the unavailability of detailed data on the impact of the changes introduced in the Delegated Act. However, the EBA intends to repeat, in the future, its analysis to update the list of currencies and their related shortages.
Background and legal basis
The final draft Implementing Technical Standards (ITS) on currencies with constraints on the availability of liquid assets have been developed according to Article 419(4) of the Capital Requirements Regulation (CRR) and were submitted to the Commission for endorsement on 27 March 2014.
On 11 May 2015, the Commission informed the EBA that in accordance with the procedure set out in the fourth and fifth subparagraphs of Article 15(1) of Regulation (EU) No 1093/2010, it intended to amend the final draft ITS submitted by the EBA.
On 10 October 2014, the Commission adopted its Delegated Act on the LCR (Delegated Regulation (EU) 2051/61).
The EBA's competence to deliver an opinion is based on the fifth subparagraph of Article 15(1) of Regulation (EU) No 1093/2010. In accordance with Article 14(5) of the Rules of Procedure of the Board of Supervisors, the Board of Supervisors adopted this Opinion.