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INTRODUCTION

What is in the banking package?

Yesterday's package isintended to encourage banks to make full use of the flexibility embedded in the EU's prudential and accounting framework, so that banks can fully support citizens and companies during this pandemic by providing funding. It is part of a series of measures taken by the European Commission to mitigate the economic impact of the Coronavirus pandemic across the European Union.

We are clarifying how the current rules can be applied more flexibly and in a coherent manner across the EU, while maintaining a prudent approach so as to preserve financial stability. It provides a consistent and uniform interpretation of the flexibility in these rules, so that banks and supervisors are on the same footing across the EU. Yesterday's package includes an Interpretative Communication on the EU's accounting and prudential frameworks (“Supporting businesses and households amid COVID-19”), as well as targeted “quick fix” amendments to EU banking rules (the Capital Requirements Regulation (CRR)).

What does the Interpretative Communication aim to do?

In its Communication of 13 March 2020 on a coordinated economic response to the Coronavirus pandemic, the Commission invited prudential and accounting authorities to further specify how to make best use of the flexibility provided for in the existing regulatory framework. These authorities have since provided guidance on how these rules should be applied in the EU.

Yesterday's Interpretative Communication confirms this guidance and further clarifies how EU rules should be applied by banks and supervisors in a flexible but responsible manner, so that they can continue to lend to businesses and households in the current context. It is part of EU efforts to ensure a coordinated response to the pandemic in order to avoid national fragmentation and to ensure a level playing field.

How will the Commission work with the financial sector to ensure a coordinated response to mitigate the impact of the pandemic and contribute to economic recovery?

The Commission will launch a dialogue with the European financial sector and business and consumers representatives to explore ideas on how the sector should support efforts to help citizens and businesses through this pandemic and to enable a recovery. To this end, the Commission will work closely with all relevant stakeholders in the financial sector to support their role and engagement and to draw up a list of best practices.

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