COVID-19: CRR Quick Fix
The amendments to Regulation (EU) No 575/2013 (CRR) and Regulation (EU) 2019/876 (CRR II)
On 26 June 2020 the new Regulation (EU) 2020/873 amending Regulation (EU) No 575/2013 (CRR) and Regulation (EU) 2019/876 (CRR II) in response to the COVID-19 pandemic was published in the Official Journal of the European Union. It applies from 27 June 2020.
The COVID-19 pandemic and the comprehensive measures taken by the Union and its Member States to contain the coronavirus, sometimes even including a “lockdown” of whole economies, have an unprecedented and far-reaching impact on the European economy. In using the flexibility of the existing prudential framework, competent authorities across Europe provided institutions with capital and operational relief that aim to ensure that they continue lending to solvent and viable undertakings that suffer from the economic downturn. The importance of credit institutions during the COVID-19 pandemic was concisely formulated by BaFin president Felix Hufeld recently: “This time banks are not part of the problem, […], but part of the solution.”
However, it became clear that the flexibility already embedded in the current regulatory framework was not sufficient to achieve the desired positive effects on lending capacity and loss absorption for which reason, on 28 April 2020, the European Commission published a proposal for a new Regulation (COM Proposal) amending the CRR and the CRR II by introducing some targeted changes (known as “CRR quick fix” or CRR 2.5) that further support the existing measures and implement the arrangements agreed on international level, namely in the Basel Committee on Banking Supervision (BCBS).
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