The NCMO meeting of 8 May 2020

2020-May-11 | Meetings

The first meeting of this year of the General Board of the National Committee for Macroprudential Oversight (NCMO) was held on 8 May 2020 by written procedure.

During the meeting, Board members discussed issues focusing on macroprudential policy and systemic risk, namely: (i) the regular analysis on the recalibration of the countercyclical capital buffer, (ii) the draft Annual Report of the National Committee for Macroprudential Oversight for 2019, and (iii) the one-year deferral of the IFRS implementation plan by NBFIs.

In addition, the NCMO General Board was informed of (i) the actions taken by the addressees in order to implement the recommendations issued by the National Committee for Macroprudential Oversight in the period from December 2018 to December 2019, as well as those issued in the previous period, which have not been completed or are applicable on a permanent basis, (ii) the possible impact on the financial system generated by the normative acts providing for loan repayment holidays, and (iii) the preliminary assessment of the banking sector’s capacity to weather adverse developments of a higher intensity.

Following the discussions, the macroprudential policy measures below were unanimously approved:

  1. NCMO Recommendation No. R/1/2020 on the countercyclical capital buffer – Given the objective of the countercyclical capital buffer, i.e. to counter the procyclicality in the financial system, in the current context of the COVID-19 crisis, such an additional capital requirement is not warranted. Moreover, considering that total indebtedness currently remains below the signalling threshold and setting a countercyclical buffer rate above 0 (zero) percent is, thus, not necessary, the National Bank of Romania is recommended to maintain the countercyclical buffer rate at 0 (zero) percent.

  2. NCMO Recommendation No. R/2/2020 amending the strategy regarding the implementation of the International Financial Reporting Standards (IFRS) by non-bank financial institutions as a basis of accounting and for preparing individual financial statements – Amid the COVID-19 pandemic crisis, with a view to supporting non-bank financial institutions to use the existing resources for the proper functioning of operational activities, the plan to implement the IFRS by these entities is postponed by one year.

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.