ECB updates treatment of leverage ratio in Eurosystem monetary policy counterparty framework

ECB
  • Amendments to give effect to the leverage ratio becoming a binding Pillar 1 own-funds requirement under the Capital Requirements Regulation (CRR)
  • Change will apply as of 28 June 2021
  • The European Central Bank (ECB) has today published amendments to its monetary policy implementation Guideline[1] to give effect to the leverage ratio becoming a binding Pillar 1 own-funds requirement. The amended guideline implements a decision taken by the Governing Council on 6 May 2021. The decision is linked to this prudential requirement becoming binding as of 28 June 2021, in line with the entry into force of related regulatory requirements.[2]

    Under the amended Guideline, automatic measures are applied in case of breaches of the leverage ratio requirement or in case the information on the leverage ratio is incomplete or not made available in time. As of 28 June 2021, the treatment of the leverage ratio in the Eurosystem monetary policy counterparty framework will be aligned with that of existing Pillar 1 own-funds requirements, consisting of the common equity tier 1 capital ratio, the tier 1 capital ratio and the total capital ratio.

    Guideline ECB/2021/23 is available on the ECB’s website and will be published in the 23 official EU languages in the Official Journal of the European Union.[3]

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