Reciprocity regime

Voluntary reciprocity regime for macroprudential policies of European Economic Area countries

To ensure consistent and effective cross-border macroprudential policy in line with the Credit Institutions Law Article 35.⁶ (1), Article 35.²¹ (1), Article 50 (4) and Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 Article 124 Point 5 and Article 164 Point 7, on October 19, 2016, the Financial and Capital Market Commission (the FCMC) adopted a decision “On general approach towards the voluntary reciprocation of macroprudential measures”.

The adopted general approach is the following:

1. To reciprocate macroprudential measures applied by European Economic Area countries provided that:

1.1. Member States have notified that reciprocation is required for such measures;

1.2. There is no substantial reason for not doing so, e.g., if the impact analysis shows that the reciprocated measure would not potentially reduce effectiveness of the measures implemented in Latvia.

2. To make use of exemption and not apply reciprocation of particular measure to Latvian credit institutions if they have no material cross-border exposures in relevant jurisdiction. The decision that a Latvian credit institution does not have material cross-border exposures in the relevant Member State would be adopted in case the relevant cross-border exposures of the Latvian credit institution to the relevant Member State to which the requirement is applicable do not exceed the lowest of: 1 million euro or the threshold set by the relevant Member State.

The list of currently active measures recommended for reciprocation is available at the European Systemic Risk Board homepage: https://www.esrb.europa.eu/national_policy/reciprocation/html/index.en.html

The FCMC Council’s decisions for the reciprocation of measures:

1. Measure of a 1-percent systemic risk buffer rate applied in accordance with Article 133 of Directive 2013/36/EU to the domestic exposures of all credit institutions authorized in Estonia is reciprocated according to the FCMC Council’s decision No. 162
2. Measures of Belgium, Finland, France and Sweden are not reciprocated taking into account the de minimis principle according to the FCMC Council’s decision No. 112