AI Summary of Article 412 Liquidity coverage requirement
This document outlines the liquidity requirements that institutions must adhere to under stressed conditions, emphasising the necessity for holding liquid assets sufficient to cover net outflows over a 30-day period. Institutions are prohibited from double counting their liquidity outflows, inflows, and liquid assets, ensuring clarity and accuracy in their liquidity assessments.
Furthermore, Member States retain the authority to implement or uphold stricter national liquidity requirements prior to the full establishment of binding minimum standards within the Union, potentially mandating institutions to maintain a liquidity coverage of up to 100%. This provision underscores the flexibility afforded to jurisdictions in navigating regulatory compliance.
Article 412 Liquidity coverage requirement
1. Institutions shall hold liquid assets, the sum of the values of which covers the liquidity outflows less the liquidity inflows under stressed conditions so as to ensure that institutions maintain levels of liquidity buffers which are adequate to face any possible imbalance between liquidity inflows and outflows under gravely stressed conditions over a period of thirty days. During times of stress, institutions may use their liquid assets to cover their net liquidity outflows.
2. Institutions shall not double count liquidity outflows, liquidity inflows and liquid assets.
Unless specified otherwise in the delegated act referred to in Article 460(1), where an item can be counted in more than one outflow category, it shall be counted in the outflow category that produces the greatest contractual outflow for that item.
3. Institutions may use the liquid assets referred to in paragraph 1 to meet their obligations under stressed circumstances as specified under Article 414.
4. The provisions set out in Title II shall apply exclusively for the purposes of specifying reporting obligations set out in Article 415.