The European Central Bank provides temporary relief for capital requirements for market risk

European Central Bank - Image by moritz320 from Pixabay

The European Central Bank (ECB) has announced a temporary reduction in capital requirements for market risk, by allowing banks to adjust the supervisory component of these requirements.

As well as smoothing procyclicality, the reduction aims to maintain banks’ ability to provide market liquidity and to continue market-making activities during the COVID-19 pandemic.

The ECB indicates the decision will be reviewed after six months on the basis of observed volatility.

Photo Credit: Pixabay

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