The NCMO meeting of 17 December 2018
The General Board of the National Committee for Macroprudential Oversight (NCMO) convened on 17 December 2018 for its fourth meeting of the year. Discussions referred to macroprudential policy matters, such as the regular analysis on the recalibration of the countercyclical capital buffer, the appropriateness of reciprocating the macroprudential measure adopted by Belgium, the impact of credit institutions’ funding plans on the flow of credit to the real economy, the strategy regarding the implementation of the International Financial Reporting Standards (IFRS) by non-bank financial institutions (NBFIs), entities under the NBR supervision, as basis of accounting and for preparing individual financial statements, and the methodology for identifying the critical functions of credit institutions.
On this occasion, the NCMO General Board was informed of the systemic risks identified in the national financial system, as well as of the results of the solvency stress test of banks. Moreover, NCMO members were notified of the way in which the recommendations issued by the NCMO in the period from 2017 to September 2018 had been implemented by the national authorities that had received those recommendations.
Following the discussions, the macroprudential policy measures below were unanimously approved:
- NCMO Recommendation No. R/8/2018 on the countercyclical capital buffer in Romania – Considering that total indebtedness currently remains below the alert threshold and setting a countercyclical buffer rate above 0 (zero) percent is, thus, not necessary, and the National Bank of Romania has recently implemented new measures for the adequate management of households’ indebtedness level, the National Bank of Romania is recommended to maintain the countercyclical buffer rate at 0 percent.
- Decision No. D/10/2018 on not applying through voluntary reciprocity the macroprudential policy measure adopted by Belgium – The macroprudential measure taken by the Belgian authorities consists in a 5 percentage point risk-weight add-on for retail exposures secured by Belgian residential immovable property and in an increase by 33 percent of the exposure-weighted average of the risk weights to the residential mortgage portfolio, applicable to authorised banks under Belgian law that use the internal ratings-based (IRB) approach for calculating regulatory capital requirements in line with Article 458(2)(d)(vi) of Regulation (EU) No 575/2013. Given that retail exposures secured by Belgium residential immovable property of credit institutions in Romania using the IRB approach are immaterial, the NCMO decided not to reciprocate the macroprudential policy measure adopted by Belgium. This type of exposure will be periodically monitored and the National Bank of Romania will propose the necessary measures should these exposures become material.
- NCMO Advisory Opinion No. OC/1/2018 regarding the Methodology for identifying the critical functions of credit institutions prepared by the National Bank of Romania, whereby the National Committee for Macroprudential Oversight issues a favourable advisory opinion on the methodology for identifying the critical functions of credit institutions.
The National Committee for Macroprudential Oversight was established by virtue of Law No. 12/2017 on the macroprudential oversight of the national financial system, thus ensuring that Recommendation of the European Systemic Risk Board (ESRB) No. 3/2011 on the macroprudential mandate of national authorities was implemented. The NCMO brings together representatives of the National Bank of Romania, the Financial Supervisory Authority and the Government of Romania. The NCMO’s mission is to ensure coordination in the field of macroprudential oversight of the national financial system by setting the macroprudential policy and the appropriate instruments for its implementation.