European Central Bank will not extend liquidity relief into next year

On 17 December 2021, the European Central Bank (ECB) announced that it would not extend the relief related to liquidity requirements beyond 31 December 2021.

Through a decision published by the ECB on 12 March 2020, banks under the direct supervision of the ECB have been permitted flexibility in meeting the requirement for liquidity coverage ratio (LCR). The Financial Supervision Authority (FIN-FSA) has adopted the same approach in banks under the direct FIN-FSA supervision. The relief has supported the banks’ ability to finance the economy in the face of COVID-related market uncertainty.

The ECB considers that there is no longer any need for the relief, as the banks’ liquidity is good. In Finland, too, the banks' liquidity is at a high level. There is accordingly no need to maintain the option for flexibility in meeting the LCR requirement also with regard to banks under direct FIN-FSA supervision. The banks’ liquid coverage ratio must therefore be above 100% as of 1 January 2022.

Of the credit institutions operating in Finland, Nordea Bank Plc, OP Financial Group and Municipality Finance Plc are under direct ECB supervision.

Further information:

ECB Banking Supervision press release: ECB will not extend liquidity relief beyond December 2021 (europa.eu)

For further information, please contact:

Marjo Risku, Senior Risk Expert, tel. +358 9 183 5275 or marjo.risku(at)finanssivalvonta.fi