AI Summary of Article 500a Temporary treatment of public debt issued in the currency of another Member State
This regulation provides a provisional framework for exposures to Member States' central governments and central banks where denominated in a foreign domestic currency. The risk weights applied to these exposures are set to decrease progressively from 0% in 2024 to 50% by the end of 2026.
Furthermore, institutions may incur such exposures up to specified limits based on their Tier 1 capital, relaxing these limits from 100% until 2025 down to 50% by 2027. Notably, institutions can also employ the Standardised Approach for specific exposures assigned a 0% risk weight, conditional upon prior approval from competent authorities.
Article 500a Temporary treatment of public debt issued in the currency of another Member State
1.By way of derogation from Article 114(2), until 31 December 2026, for exposures to the central governments and central banks of Member States, where those exposures are denominated and funded in the domestic currency of another Member State, the following apply:
(a)until 31 December 2024, the risk weight applied to the exposure values shall be 0 % of the risk weight assigned to those exposures in accordance with Article 114(2);
(b)in 2025, the risk weight applied to the exposure values shall be 20 % of the risk weight assigned to those exposures in accordance with Article 114(2);
(c)in 2026, the risk weight applied to the exposure values shall be 50 % of the risk weight assigned to those exposures in accordance with Article 114(2).
2. By way of derogation from Articles 395(1) and 493(4), competent authorities may allow institutions to incur exposures referred to in paragraph 1 of this Article, up to the following limits: