The Governing Council of the European Central Bank (ECB) said on Thursday 17 September that “exceptional circumstances” related to the Covid-19 pandemic had combined to temporarily exclude certain exposures to central banks (cash holdings and over-the-counter deposits) from calculation of the leverage ratio for non-systemic banks.
The Governing Council said in a press release that the crisis caused by the coronavirus is forcing the ECB to adopt a high degree of monetary policy accommodation, which in turn requires the undeterred functioning of the bank-based transmission channel of monetary policy. In the view of the Governing Council, the condition of exceptional circumstances warranting this measure to ease banking prudential requirements, provided for under the CRR Regulation (Article 500b(2)), is met for “the euro area as a whole”.
The opinion of the Governing Council is a precondition for a decision by the ECB, which acts as the single banking supervisor in the euro area. (Original version in French by Mathieu Bion)