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CNB > Financial stability > Macroprudential policy > Mutual recognition of macroprudential measures (reciprocity)

Mutual recognition of macroprudential measures (reciprocity)

Foreign institutions operate alongside domestic ones on the financial markets of individual EU countries. They do so primarily in the form of branches or through direct cross-border provision of services. However, the macroprudential measures adopted by a Member State may not be binding on those foreign institutions. This can undermine the effectiveness of such measures and give rise to an unlevel playing field. Consequently, the concept of reciprocity has been incorporated into the rules governing macroprudential policy in the EU in order to make that policy as effective and consistent as possible. For some measures with obvious cross-border impacts, CRD IV sets forth mandatory reciprocity, i.e. automatic application of the relevant measures in other Member States. These measures relate to banks’ exposures and include, for example, the countercyclical capital buffer. Measures for which reciprocity is not stipulated in CRD IV can be implemented by other Member States in justified cases on a voluntary basis.

The framework for voluntary reciprocity is based on the principle whereby the national macroprudential authority activating the measure makes a request through the European Systemic Risk Board (ESRB) for the measure to be applied by the other EU Member States. If the ESRB concludes that the request is justified, it issues a recommendation to reciprocate. The Member States either comply with the ESRB’s recommendation or explain why they are rejecting it.

The macroprudential measures implemented in EU countries in respect of which the Czech Republic has been recommended to reciprocate will be published below together with the CNB’s opinion. A list of all measures introduced by macroprudential authorities in the EU, along with their reciprocity status in the Member States, is provided on the ESRB website (xls).

Macroprudential measures adopted in EU countries with a request for reciprocation in the Czech Republic

No Country Instrument Date of notification to the ESRB Rate The CNB’s action Justification
1 Estonia Systemic risk buffer 26 April 2016 1% Not reciprocated, with elements of indirect reciprocation Link to the CNB’s statement
2 Belgium Activation of Article 458 of the CRR
Inactive
21 January 2016 A surcharge of 5 percentage points on the risk weights of IRB banks for mortgage loans for purchase of residential property located in Belgium Not reciprocated Link to the CNB’s statement
3 Finland Activation of Article 458 of the CRR 27 June 2018 A minimum average risk weight level of 15% applied at the level of IRB banks to house purchase loans secured by residential property located in Finland Not reciprocated Link to the CNB’s statement
4 Belgium Activation of Article 458 of the CRR 14 Mach 2018 A flat risk-weight add-on of 5 percentage points and a proportionate risk-weight add-on consisting of 33 per cent of the exposure-weighted average of the risk-weights of IRB banks for mortgage loans for purchase of residential property located in Belgium. Not reciprocated Link to the CNB’s statement
5 France Activation of Article 458 of the CRR 3 April 2018 A tightening of the large exposure limit to 5 per cent of their eligible capital, applicable to exposures to highly-indebted large non-financial corporations having their registered office in France. Not reciprocated Link to the CNB’s statement