The European Banking Authority published its first Report on the monitoring of liquidity coverage ratio (LCR) implementation in the EU.
The general objective of the EBA monitoring work in the area of liquidity is to foster a higher degree of harmonisation in the implementation of the LCR in the areas where divergent practices have been observed, partly due to insufficient clarity of the regulatory provisions.
In the Report, the EBA has highlighted areas in which further guidance is deemed useful for banks and supervisors in order to foster a common understanding and harmonisation of the application of the liquidity standard, while at the same time reducing some issues on the level playing field. In particular, the Report provides guidance on operational deposits and retail deposits excluded from outflows as well as on notifications on additional liquidity outflows.
In addition, the Report has identified areas that may need further attention from supervisors in their ongoing supervision of liquidity risks.
The EBA will further assess how the guidance provided in the report will be used by banks and supervisors and consider taking further steps if needed (including some fully fledged products such as guidelines, recommendations, etc.), while continuing its monitoring of the aspects mentioned in the report.
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