ec.europa.eu: What is in today's banking package?

Today we are clarifying how the current rules can be applied more flexibly and in a coherent manner across the EU, while maintaining a prudent approach so as to preserve financial stability. It provides a consistent and uniform interpretation of the flexibility in these rules, so that banks and supervisors are on the same footing across the EU. Today's package includes an Interpretative Communication on the EU's accounting and prudential frameworks (“Supporting businesses and households amid COVID-19”), as well as targeted “quick fix” amendments to EU banking rules (the Capital Requirements Regulation (CRR)).

What does the Interpretative Communication aim to do?

In its Communication of 13 March 2020 on a coordinated economic response to the Coronavirus pandemic, the Commission invited prudential and accounting authorities to further specify how to make best use of the flexibility provided for in the existing regulatory framework. These authorities have since provided guidance on how these rules should be applied in the EU.

What are the recommendations in today's Interpretative Communication? Can you give examples of flexibility in the EU's banking rules?

Following the financial crisis, the EU's financial system is far more robust and banks are better capitalised. The creation of the Banking Union in 2013, with more coordinated supervision and efforts to reduce risk in the banking system has greatly helped in terms of making the financial sector more resilient.

This is why the banking sector is now in a position to use the flexibility provided by prudential and accounting rules. This exceptional situation caused by the Coronavirus pandemic means that some of the rules can be used more flexibly at this time so that banks can focus on lending to households and companies.

More: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_757

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