Consultation responses

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Comments on the draft delegated act amending the commission delegated regulation on the Liquidity Coverage Ratio (LCR)

Danmarks Nationalbank

The European Commission has asked for comments on the proposed amendments to the short-term liquidity rules for EU banks known as Liquidity Coverage Ratio, LCR. Danmarks Nationalbank supports the amendments which solve the unwind problem for repos with central banks in a systemic crisis. Danmarks Nationalbank is still concerned about the framework for secured transactions, which can have some unintended consequences. Danmarks Nationalbank encourages the Commission to continue the work towards a general solution of the unwind problem for secured transactions.


Consultation response regarding the draft amendment to the executive order on good business practice for mortgage lending

Danmarks Nationalbank

The suggested amendment limits the product supply for homeowners with a total debt-to-income, DTI, of more than four and a loan-to-value, LTV, of more than 60 per cent. Danmarks Nationalbank finds it positive that the rules apply to all homeowners with high debt in proportion to income, regardless of the zip code of the property. On the other hand, Danmarks Nationalbank finds it inappropriate that highly indebted homeowners will still be able to finance housing purchases using deferred amortization loans. Restricting the possibility to obtain deferred amortization financing would reduce the vulnerability of homeowners to negative economic shocks such as declining house prices and unemployment, just like a higher monthly debt service would reduce the risk of short-sightedness due to low interest rates.


Reply to the Danish Financial Supervisory Authorithy's Discussion Paper on the Fit & Proper Regulations

Danmarks Nationalbank

Danmarks Nationalbank does not specifically address the individual aspects of the Fit & Proper regulations highlighted in the Danish Financial Supervisory Authority's discussion paper. On a more general basis, Danmarks Nationalbank finds it essential to maintain the owners' and management's full responsibility for the sound operation of a credit institution. The EU Fit & Proper regulations give the member states a certain degree of flexibility. In Danmarks Nationalbank's view, no Danish rules or practices generally expanding the Danish Financial Supervisory Authority's Fit & Proper tasks relative to the current regime should be implemented.


Consultation on amendment of the Supervisory Diamond for banks

Danmarks Nationalbank

The Danish Financial Supervisory Authority has submitted a change in the liquidity benchmark in the Supervisory Diamond for consultation. Danmarks Nationalbank agrees that sound liquidity management in the individual banks is key to ensuring a robust financial system and that the supervisory authorities must have the necessary powers and supervisory tools to follow up and respond to insufficient liquidity management in a bank. But it is important to emphasise that the point of departure must still be that the banks themselves are responsible for managing their liquidity risks. Danmarks Nationalbank notes that the Supervisory Diamond, including the liquidity benchmark, is a supervisory tool which is used as part of the overall supervisory assessment of the risks and risk management of the individual bank.


Consultation on amendment of the executive order on Financial reports

Danmarks Nationalbank

The Danish Financial Supervisory Authority has submitted a draft amendment of the Executive Order on Financial Reports for Credit Institutions and Investment Firms, etc. (the "Executive Order") for consultation along with guidance notes. A well-founded adjustment of the rules against that background, so that the managements of Danish institutions have the same scope for making accounting estimates as those of other European institutions, could contribute to simplifying financial regulation and strengthening the basis for cross-border competition. In general, Danmarks Nationalbank also finds that such adjustments are sound. However, it is important to emphasise that the core elements of robust regulation of the financial sector must be in place first. In addition to capital requirements and stable funding requirements, it is essential that all credit institutions can be resolved – without major adverse implications for the economy and financial stability.