Small European economies weathering the storm of the financial and - - PowerPoint PPT Presentation

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Dec 23, 2022 324 likes •420 views

Small European economies weathering the storm of the financial and economic crisis EFTA parliamentary Committee p y Brussels, 16 November 2011 1 Small European economies a h homogeneous group? ? Inside / outside the EU EEA or not?

SLIDE 1

Small European economies weathering the storm of the financial and economic crisis

EFTA parliamentary Committee p y Brussels, 16 November 2011

1

SLIDE 2

Small European economies a h ? homogeneous group?

Inside / outside the EU EEA or not? (single passport State
Inside / outside the EU, EEA or not? (single passport, State

Aid)

Economic structure and GDP per capita

p p

degree of openness
Fiscal space
Link to the Euro
size of the financial sector

administrative capacity (state supervisors central banks)

administrative capacity (state, supervisors, central banks)

2

SLIDE 3

CRD IV core part of Commission response to crisis

CRD IV (incl. corporate governance and ti ) sanctions) CRD II & CRD III EU framework for crisis management and resolution Overhaul of the EU supervisory architecture MIFID and MAD review, short selling Stress test s o t se g AIFM, DGS, Credit Rating Agency Derivatives (EMIR) AIFM, DGS, mortgage credit, FICOD, protection schemes, remuneration… Credit Rating Agency Regulation, External Audit

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Main Drivers CRD I V proposal Main Drivers CRD I V proposal

Financial Stability and Sustainable Growth
Financial Stability and Sustainable Growth
Unprecedented State Aid to European banks: Euro 3.6 trillion
Basel 3 agreement: December 2010

Basel 3 agreement: December 2010

G20 agreement to implement Basel 3
Single Rule Book European Council Decision: June 2009
Review of the existing CRD legislation

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SLIDE 5

Legislative proposal on CRD IV - what?

REGULATION DIRECTIVE

where interlinkages with national laws are particularly important CAPITAL Increase quantity/Improve quality

+

Backstop LIQUIDITY LEVERAGE RATIO Resilience to funding risks CORPORATE

+

CAPITAL BUFFERS p RATIO COUNTER- PARTY CREDIT RISK SINGLE RULE Higher capital charge - derivatives

+

GOVERNANCE SANCTIONS Maximum harmonisation SINGLE RULE BOOK

+

ENHANCED SUPERVISION

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SLIDE 6

I mpact Assessment I mpact Assessment

Different impact on the RWAs of Big (+25%) and Small Banks

p g ( ) (+4%)

Phasing in from 2013 to 2019
Overall funding needs by 2019 about 460 billion
Overall funding needs by 2019 about 460 billion
Long-term economic benefits (0.3% to 2% of EU annual GDP)
Slight increase in loan rates: 0.29% and moderate decrease

i h k f l 1 8% in the stock of loans 1.8%

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Challenges C a e ges

Legislative process Legislative process Adoption before January 2013 – Council (has started) E P li ( A il 2012 ECON J l Pl ) – European Parliament (vote April 2012 ECON July Plenary) EBA Developing draft regulatory (76) and implementing technical standards (32) and guidelines (20) + Commission ( ) g ( ) has to adopt Interplay crisis (sovereigns, SIFIs?)

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Specific issues for small economies from CRD I V th CRD I V + other

Single passport

systemically important branches home

Single passport - systemically important branches - home

host issues

Liquidity subgroups host countries

q y g p

Countercyclical capital buffer (LU)
Limited supervisory capacity -> high capital and liquidity

i t ? requirements?

Leverage ratio (if low risk business model)
Not in CRD IV: Structural measures Bank resolvability
Not in CRD IV: Structural measures, Bank resolvability