The European Banking Authority (EBA) has launched a public consultation on amendments to its Implementing Technical Standards (ITS) on currencies with constraints on the availability of liquid assets in the context of the liquidity coverage ratio (LCR). The proposed amendments remove the Norwegian Krone (NOK) from the list, with the result that no currency will be recognised as having constraints on the availability of liquid assets. The consultation runs until 16 October 2021.
Article 419 of the Capital Requirements Regulation (CRR) specifies a number of derogations applicable to currencies with constraints on the availability of liquid assets for the purpose of the calculation of the LCR. An additional derogation was added as part of the Risk Reduction Measures (RRM) package adopted by the European legislators.
The EBA has been tasked to amend the existing Regulatory Technical Standards (RTS) specifying the use of derogations and the conditions of their application following the addition of a new derogation, with a concomitant need to update the corresponding ITS on the effective list of currencies with constraints, which currently consists of one single currency, the NOK.
Based on the updated data analysis, which demonstrates that there is no longer a shortage in the supply of liquid assets in the NOK currency, the EBA proposes to amend the ITS by removing NOK from the list. Since this amendment will lead to an empty list, in order to keep its regulatory efforts proportionate to their impact, the EBA will not update the corresponding RTS. Such an update will be proposed if during a future assessment the EBA observes that a currency will have to be added to the list.
Comments to this consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. Please note that the deadline for the submission of comments is 16 October 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
Legal basis and background
These draft ITS have been developed on the basis of Article 419 of Regulation (EU) No 575/2013 of the European Parliament and of the Council), as amended by Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019, which mandates the Authority to list the currencies with constraints on the availability of liquid assets and specify the derogations and conditions of their application.
- Consultation paper on amended ITS on currencies with constraints on the availability of liquid assets
- Amended Implementing Technical Standards on currencies with constraints on the availability of liquid assets
- Technical Standards on currencies with constraints on the availability of liquid assets
- Liquidity risk