title: Recommendation of the European Systemic Risk Board of 24 March 2021 amending Recommendation ESRB/2015/2 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures (ESRB/2021/2) 2021/C 222/02

text:
                  11.6.2021

                  EN

                  Official Journal of the European Union

                  C 222/13

         RECOMMENDATION OF THE EUROPEAN SYSTEMIC RISK BOARD
         of 24 March 2021
         amending Recommendation ESRB/2015/2 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures (ESRB/2021/2)
         (2021/C 222/02)
         THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
         Having regard to the Treaty on the Functioning of the European Union,
         Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Article 3 and Articles 16 to 18 thereof,
         Having regard to Decision ESRB/2011/1 of the European Systemic Risk Board of 20 January 2011 adopting the Rules of Procedure of the European Systemic Risk Board (2), and in particular Articles 18 to 20 thereof,
         Whereas:

                     (1)

                     In order to ensure effective and consistent national macroprudential policy measures, it is important to complement the mandatory reciprocity required under Union law with voluntary reciprocity.

                     (2)

                     The framework on voluntary reciprocity for macroprudential policy measures, set out in Recommendation ESRB/2015/2 of the European Systemic Risk Board (3), aims to ensure that the same set of macroprudential requirements apply to the same type of risk exposures in a given Member State, irrespective of the legal status and location of the financial service provider.

                     (3)

                     Recommendation ESRB/2017/4 of the European Systemic Risk Board (4) recommends the relevant activating authority to propose a maximum materiality threshold when submitting a request for reciprocation to the European Systemic Risk Board (ESRB), below which an individual financial service provider’s exposure to the identified macroprudential risk in the jurisdiction where the macroprudential policy measure is applied by the activating authority can be considered non-material. The ESRB may recommend a different threshold if deemed necessary.

                     (4)

                     Since 1 January 2021, credit institutions, insurance corporations and professionals carrying out lending activities (mortgage lenders) in Luxembourg are required to comply with loan-to-value (LTV) limits on new mortgage loans on residential real estate located in Luxembourg, with different LTV limits across categories of borrowers: (i) an LTV limit of 100 % for first-time buyers acquiring their primary residence; (ii) an LTV limit of 90 % for other buyers (i.e. not first-time buyers) acquiring their primary residence, subject to a portfolio allowance (i.e. lenders may issue 15 % of the portfolio of new mortgages granted to these borrowers with an LTV above 90 % but below the maximum LTV of 100 %); (iii) an LTV limit of 80 % for other mortgage loans (including the buy-to-let segment).

                     (5)

                     Following the request for reciprocation by the Comité du Risque Systémique (Systemic Risk Committee) to the ESRB on 18 December 2020, and in order to: (i) prevent the materialisation of negative cross-border effects in the form of leakages and regulatory arbitrage that could result from the implementation of the macroprudential policy measure applied in Luxembourg; (ii) preserve a level playing field among relevant financial institutions and preserve the overall resilience of those financial institutions; the General Board of the ESRB has decided to include this measure in the list of macroprudential policy measures which are recommended to be reciprocated under Recommendation ESRB/2015/2.

                     (6)

                     The macroprudential policy measure activated by the Commission de Surveillance du Secteur Financier (Financial Sector Supervisory Commission) is a measure that is not harmonised under Union law. In line with sub-recommendation C(2) of Recommendation ESRB/2015/2, reciprocating authorities are recommended to either implement the same macroprudential policy measure as the one that has been implemented by the activating authority or, if the same macroprudential policy measure is not available in national legislation, adopt, following consultation with the ESRB, a macroprudential policy measure available in their jurisdictions that has the most equivalent effect to the activated macroprudential policy measure.

                     (7)

                     The General Board of the ESRB has also decided to recommend an institution-specific threshold and a country-specific materiality threshold to steer the application of the de minimis principle by the reciprocating Member States.

                     (8)

                     Therefore, Recommendation ESRB/2015/2 should be amended accordingly,

               HAS ADOPTED THIS RECOMMENDATION:

            AMENDMENTS

         Recommendation ESRB/2015/2 is amended as follows:

                     1.

                     in Section 1, sub-recommendation C(1) is replaced by the following:

                                 ‘1.

                                 The relevant authorities are recommended to reciprocate the macroprudential policy measures adopted by other relevant authorities and recommended for reciprocation by the ESRB. It is recommended that the following measures, as further described in the Annex, be reciprocated:

                                             Belgium:

                                                         —

                                                         a risk-weight add-on for retail exposures secured by residential immovable property located in Belgium applied in accordance with Article 458(2)(d)(vi) of Regulation (EU) No 575/2013 to credit institutions authorised in Belgium which use the IRB Approach for calculating regulatory capital requirements and composed of:

                                                                     (a)

                                                                     a flat risk-weight add-on of 5 percentage points; and

                                                                     (b)

                                                                     a proportionate risk-weight add-on consisting of 33 per cent of the exposure-weighted average of the risk-weights applied to the portfolio of retail exposures secured by residential immovable property located in Belgium;

                                             France:

                                                         —

                                                         a tightening of the large exposure limit provided for in Article 395(1) of Regulation (EU) No 575/2013, applicable to exposures to highly-indebted large non-financial corporations having their registered office in France to 5 per cent of eligible capital, applied in accordance with Article 458(2)(d)(ii) of Regulation (EU) No 575/2013 to global systemically important institutions (G-SIIs) and other systemically important institutions (O-SIIs) at the highest level of consolidation of their banking prudential perimeter;

                                             Luxembourg:

                                                         —

                                                         legally binding loan-to-value (LTV) limits for new mortgage loans on residential real estate located in Luxembourg, with different LTV limits applicable to different categories of borrowers:

                                                                     (a)

                                                                     LTV limit of 100 % for first-time buyers acquiring their primary residence;

                                                                     (b)

                                                                     LTV limit of 90 % for other buyers i.e. non first-time buyers acquiring their primary residence. This limit is implemented in a proportional way via a portfolio allowance. Specifically, lenders may issue 15 % of the portfolio of new mortgages granted to these borrowers with an LTV above 90 % but below the maximum LTV of 100 %;

                                                                     (c)

                                                                     LTV limit of 80 % for other mortgage loans (including the buy-to-let segment).

                                             Sweden:

                                                         —

                                                         a credit institution-specific floor of 25 per cent for the exposure-weighted average of the risk weights applied to the portfolio of retail exposures to obligors residing in Sweden secured by immovable property in accordance with Article 458(2)(d)(vi) of Regulation (EU) No 575/2013 to credit institutions authorised in Sweden which use the IRB Approach for calculating regulatory capital requirements.’;

                     2.

                     The Annex is replaced by the Annex to this Recommendation.

            Done at Frankfurt am Main, 24 March 2021.

                  The Head of the ESRB Secretariat,

                  on behalf of the General Board of the ESRB

               Francesco MAZZAFERRO

            (1)  OJ L 331, 15.12.2010, p. 1.

            (2)  OJ C 58, 24.2.2011, p. 4.

            (3)  Recommendation ESRB/2015/2 of the European Systemic Risk Board of 15 December 2015 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures (OJ C 97, 12.3.2016, p. 9).

            (4)  Recommendation ESRB/2017/4 of the European Systemic Risk Board of 20 October 2017 amending Recommendation ESRB/2015/2 on the assessment of cross-border effects of and voluntary reciprocity for macroprudential policy measures (OJ C 431, 15.12.2017, p. 1).

            ANNEX

                     ‘ANNEX

                        Belgium

                           A risk weight add-on for retail exposures secured by residential immovable property located in Belgium, imposed on credit institutions authorised in Belgium using the IRB Approach and applied in accordance with Article 458(2)(d)(vi) of Regulation (EU) No 575/2013. The add-on is composed of two components:

                                 (a)

                                       a flat risk weight add-on of 5 percentage points; and

                                 (b)

                                       a proportionate risk weight add-on consisting of 33 per cent of the exposure-weighted average of the risk weights applied to the portfolio of retail exposures secured by residential immovable property located in Belgium.

                           I.   Description of the measure

                                 1.

                                 The Belgian measure, applied in accordance with Article 458(2)(d)(vi) of Regulation (EU) No 575/2013 and imposed on credit institutions authorised in Belgium using the IRB Approach, consists of a risk weight add-on for retail exposures secured by residential immovable property located in Belgium, which is composed of two components:

                                             (a)

                                             The first component consists of a 5 percentage point increase to the risk weight for retail exposures secured by residential immovable property located in Belgium obtained after computing the second part of the risk-weight add-on in accordance with point (b).

                                             (b)

                                             The second component consists of a risk-weight increase of 33 per cent of the exposure-weighted average of the risk-weights applied to the portfolio of retail exposures secured by residential immovable property located in Belgium. The exposure-weighted average is the average of the risk-weights of the individual loans calculated in accordance with Article 154 of Regulation (EU) No 575/2013, weighted by the relevant exposure value.

                           II.   Reciprocation

                                 2.

                                 In accordance with Article 458(5) of Regulation (EU) No 575/2013, relevant authorities of the Member States concerned are recommended to reciprocate the Belgian measure by applying it to branches located in Belgium of domestically authorised credit institutions using the IRB Approach within the deadline specified in sub-recommendation C(3).

                                 3.

                                 Relevant authorities are recommended to reciprocate the Belgian measure by applying it to domestically authorised credit institutions using the IRB Approach that have direct retail exposures secured by residential immovable property located in Belgium. In accordance with sub-recommendation C(2), the relevant authorities are recommended to apply the same measure as the one that has been implemented in Belgium by the activating authority within the deadline specified in sub-recommendation C(3).

                                 4.

                                 If the same macroprudential policy measure is not available in their jurisdiction, the relevant authorities are recommended to apply, following consultation with the ESRB, a macroprudential policy measure available in their jurisdiction that has the most equivalent effect to the above measure recommended for reciprocation, including adopting supervisory measures and powers laid down in Title VII, Chapter 2, Section IV of Directive 2013/36/EU. Relevant authorities are recommended to adopt the equivalent measure by no later than four months following the publication of this Recommendation in the Official Journal of the European Union.

                           III.   Materiality threshold

                                 5.

                                 The measure is complemented by an institution-specific materiality threshold of EUR 2 billion to steer the potential application of the de minimis principle by the relevant authorities reciprocating the measure.

                                 6.

                                 In line with Section 2.2.1 of Recommendation ESRB/2015/2, relevant authorities of the Member State concerned may exempt individual domestically authorised credit institutions using the IRB Approach having non-material retail exposures secured by residential immovable property in Belgium which are below the materiality threshold of EUR 2 billion. When applying the materiality threshold, the relevant authorities should monitor the materiality of exposures and are recommended to apply the Belgian measure to previously exempted individual domestically authorised credit institutions when the materiality threshold of EUR 2 billion is breached.

                                 7.

                                 Where there are no credit institutions authorised in the Member States concerned with branches located in Belgium or which have direct retail exposures secured by residential immovable property in Belgium, which use the IRB Approach and which have exposures of EUR 2 billion or above to the Belgian residential immovable property market, relevant authorities of the Member States concerned may, pursuant to Section 2.2.1 of Recommendation ESRB/2015/2, decide not to reciprocate the Belgian measure. In this case the relevant authorities should monitor the materiality of the exposures and are recommended to reciprocate the Belgian measure when a credit institution using the IRB Approach exceeds the threshold of EUR 2 billion.

                                 8.

                                 In line with Section 2.2.1 of Recommendation ESRB/2015/2, the materiality threshold of EUR 2 billion is a recommended maximum threshold level. Reciprocating relevant authorities may therefore instead of applying the recommended threshold set a lower threshold for their jurisdictions where appropriate, or reciprocate the measure without any materiality threshold.

                        France

                           A tightening of the large exposure limit provided for in Article 395(1) of Regulation (EU) No 575/2013, applicable to exposures to highly-indebted large non-financial corporations having their registered office in France to 5 per cent of eligible capital, applied in accordance with Article 458(2)(d)(ii) of Regulation (EU) No 575/2013 to global systemically important institutions (G-SIIs) and other systemically important institutions (O-SIIs) at the highest level of consolidation of their banking prudential perimeter.

                     I.   Description of the measure

                                 1.

                                 The French measure, applied in accordance with Article 458(2)(d)(ii) of Regulation (EU) No 575/2013 and imposed on G-SIIs and O-SIIs at the highest level of consolidation of their banking prudential perimeter (not at a sub-consolidated level), consists of a tightening of the large exposure limit to 5 per cent of their eligible capital, applicable to exposures to highly-indebted large non-financial corporations having their registered office in France.

                                 2.

                                 A non-financial corporation is defined as a natural or legal person under private law having its registered office in France, and which, at its level and at the highest level of consolidation, belongs to the non-financial corporations sector as defined in point 2.45 of Annex A to Regulation (EU) No 549/2013 of the European Parliament and of the Council (*1).

                                 3.

                                 The measure applies to exposures to non-financial corporations having their registered office in France and to exposures to groups of connected non-financial corporations as follows:

                                             (a)

                                             For non-financial corporations which are part of a group of connected non-financial corporations having its registered office at the highest level of consolidation in France, the measure applies to the sum of the net exposures towards the group and all its connected entities within the meaning of point (39) of Article 4(1) of Regulation (EU) No 575/2013;

                                             (b)

                                             For non-financial corporations which are part of a group of connected non-financial corporations having its registered office at the highest level of consolidation outside France, the measure applies to the sum of:

                                                         a.

                                                         the exposures to those non-financial corporations having their registered office in France;

                                                         b.

                                                         the exposures to the entities in France or abroad over which the non-financial corporations referred to in (i) have direct or indirect control within the meaning of point (39) of Article 4(1) of Regulation (EU) No 575/2013; and

                                                         c.

                                                         the exposures to the entities in France or abroad which are economically dependent on the non-financial corporations referred to in (i) within the meaning of point (39) of Article 4(1) of Regulation (EU) No 575/2013.

                                       Non-financial corporations which do not have their registered office in France and which are not a subsidiary or an economically dependent entity of, and which are not directly or indirectly controlled by, a non-financial corporation having its registered office in France, therefore fall outside the scope of the measure.
                                 In accordance with Article 395(1) of Regulation (EU) No 575/2013, the measure is applicable after taking into account the effect of the credit risk mitigation techniques and exemptions in accordance with Articles 399 to 403 of Regulation (EU) No 575/2013.

                                 4.

                                 A G-SII or an O-SII must consider a non-financial corporation having its registered office in France as large if its original exposure to the non-financial corporation, or to the group of connected non-financial corporations within the meaning of paragraph 3, is equal to or larger than EUR 300 million. The original exposure value is calculated in accordance with Articles 389 and 390 of Regulation (EU) No 575/2013 before taking into account the effect of credit risk mitigation techniques and exemptions set out in Articles 399 to 403 of Regulation (EU) No 575/2013, as reported in accordance with Article 9 of Commission Implementing Regulation (EU) No 680/2014 (*2).

                                 5.

                                 A non-financial corporation is considered highly-indebted if it has a leverage ratio that is greater than 100 per cent and a financial charges coverage ratio that is below three, calculated at the highest level of group consolidation as follows:

                                             (a)

                                             The leverage ratio is the ratio between total debt net of cash and equity; and

                                             (b)

                                             The financial charges coverage ratio is the ratio between, on the one hand, the value added plus operating subsidies less: (i) payroll; (ii) operating taxes and duties; (iii) other net ordinary operating expenses excluding net interest and similar charges; and (iv) depreciation and amortisation, and, on the other hand, interest and similar charges.

                                       The ratios are calculated based on accounting aggregates defined in accordance with the applicable standards, as presented in the non-financial corporation’s financial statements, certified where appropriate by a chartered accountant.

                           II.   Reciprocation

                                 6.

                                 Relevant authorities are recommended to reciprocate the French measure by applying it to domestically authorised G-SIIs and O-SIIs at the highest level of consolidation within the jurisdiction of their banking prudential perimeter.

                                 7.

                                 If the same macroprudential policy measure is not available in their jurisdiction, in line with sub-recommendation C(2), the relevant authorities are recommended to apply, following consultation with the ESRB, a macroprudential policy measure available in their jurisdiction that has the most equivalent effect to the above measure recommended for reciprocation. The relevant authorities are recommended to adopt the equivalent measure by no later than six months following the publication of this Recommendation in the Official Journal of the European Union.

                           III.   Materiality threshold

                                 8.

                                 The measure is complemented by a combined materiality threshold to steer the potential application of the de minimis principle by the relevant authorities reciprocating the measure, which is composed of:

                                             (a)

                                             A threshold of EUR 2 billion for the total original exposures of domestically authorised G-SIIs and O-SIIs at the highest level of consolidation of the banking prudential perimeter to the French non-financial corporations sector;

                                             (b)

                                             A threshold of EUR 300 million applicable to domestically authorised G-SIIs and O-SIIs equalling or exceeding the threshold mentioned in (a) for:

                                                         (i)

                                                         a single original exposure to a non-financial corporation having its registered office in France;

                                                         (ii)

                                                         the sum of original exposures to a group of connected non-financial corporations, which has its registered office at the highest level of consolidation in France, calculated in accordance with paragraph 3(a);

                                                         (iii)

                                                         the sum of original exposures to non-financial corporations having their registered office in France which are part of a group of connected non-financial corporations having its registered office at the highest level of consolidation outside France as reported in templates C 28.00 and C 29.00 of Annex VIII to Implementing Regulation (EU) No 680/2014;

                                             (c)

                                             A threshold of 5 per cent of the G-SII’s or O-SII’s eligible capital at the highest level of consolidation, for exposures identified in (b) after taking into account the effect of the credit risk mitigation techniques and exemptions in accordance with Articles 399 to 403 of Regulation (EU) No 575/2013.

                                       The thresholds referred to in paragraphs (b) and (c) are to be applied irrespective of whether the relevant entity or non-financial corporation is highly-indebted or not.
                                 The original exposure value referred to in paragraphs (a) and (b) is to be calculated in accordance with Articles 389 and 390 of Regulation (EU) No 575/2013 before taking into account the effect of credit risk mitigation techniques and exemptions set out in Articles 399 to 403 of Regulation (EU) No 575/2013 as reported in accordance with Article 9 of Implementing Regulation (EU) No 680/2014.

                                 9.

                                 In line with Section 2.2.1 of Recommendation ESRB/2015/2, the relevant authorities of the Member State concerned may exempt domestically authorised G-SIIs or O-SIIs at the highest level of consolidation of their banking prudential perimeter which do not breach the combined materiality threshold referred to in paragraph 8. When applying the materiality threshold, the relevant authorities should monitor the materiality of the exposures of domestically authorised G-SIIs and O-SIIs to the French non-financial corporations sector as well as the exposure concentration of domestically authorised G-SIIs and O-SIIs to large non-financial corporations having their registered office in France, and are recommended to apply the French measure to previously exempted domestically authorised G-SIIs or O-SIIs at the highest level of consolidation of their banking prudential perimeter when the combined materiality threshold referred to in paragraph 8 is breached. Relevant authorities are also encouraged to signal the systemic risks associated with the increased leverage of large non-financial corporations having their registered office in France to other market participants in their jurisdiction.

                                 10.

                                 Where there are no G-SIIs or O-SIIs at the highest level of consolidation of their banking prudential perimeter authorised in the Member States concerned and having exposures to the French non-financial corporations sector above the materiality threshold referred to in paragraph 8, the relevant authorities of the Member States concerned may, pursuant to Section 2.2.1 of Recommendation ESRB/2015/2, decide not to reciprocate the French measure. In this case the relevant authorities should monitor the materiality of the exposures of domestically authorised G-SIIs and O-SIIs to the French non-financial corporations sector as well as the exposure concentration of domestically authorised G-SIIs and O-SIIs to large non-financial corporations having their registered office in France, and are recommended to reciprocate the French measure when a G-SII or O-SII at the highest level of consolidation of its banking prudential perimeter exceeds the combined materiality threshold referred to in paragraph 8. Relevant authorities are also encouraged to signal the systemic risks associated with the increased leverage of large non-financial corporations having their registered office in France to other market participants in their jurisdiction.

                                 11.

                                 In line with Section 2.2.1 of Recommendation ESRB/2015/2, the combined materiality threshold referred to in paragraph 8 is a recommended maximum threshold level. Reciprocating relevant authorities may therefore instead of applying the recommended threshold set a lower threshold for their jurisdictions where appropriate, or reciprocate the measure without any materiality threshold.

                        Luxembourg:

                           Legally binding loan-to-value (LTV) limits for new mortgage loans on residential real estate located in Luxembourg, with different LTV limits applicable to different categories of borrowers:

                                 (a)

                                       LTV limit of 100 % for first-time buyers acquiring their primary residence;

                                 (b)

                                       LTV limit of 90 % for other buyers i.e. non first-time buyers acquiring their primary residence. This limit is implemented in a proportional way via a portfolio allowance. Specifically, lenders may issue 15 % of the portfolio of new mortgages granted to these borrowers with an LTV above 90 % but below the maximum LTV of 100 %;

                                 (c)

                                       LTV limit of 80 % for other mortgage loans (including the buy-to-let segment).

                           I.   Description of the measure

                                 1.

                                 The Luxembourg authorities activated legally binding LTV limits for new mortgage loans on residential immovable property located in Luxembourg. Following the Recommendation of the Comité du Risque Systémique (Systemic Risk Committee) (1), the Commission de Surveillance du Secteur Financier (Financial Sector Supervisory Commission) (2) acting in concert with the Banque centrale du Luxembourg has activated LTV limits that differ across three categories of borrowers. The LTV limits for each of the three categories are as follows:

                                             (a)

                                             LTV limit of 100 % for first-time buyers acquiring their primary residence;

                                             (b)

                                             LTV limit of 90 % for other buyers i.e. non first-time buyers acquiring their primary residence. This limit is implemented in a proportional way via a portfolio allowance. Specifically, lenders may issue 15 % of the portfolio of new mortgages granted to these borrowers with an LTV above 90 % but below the maximum LTV of 100 %;

                                             (c)

                                             LTV limit of 80 % for other mortgage loans (including the buy-to-let segment).

                                 2.

                                 LTV is the ratio between the sum of all loans or tranches of loans backed by the borrower with residential property at the time when the loan is granted and the value of the property at the same time.

                                 3.

                                 The LTV limits apply independently from the type of ownership (e.g. full ownership, usufruct, bare ownership).

                                 4.

                                 The measure applies to any private borrower taking out a mortgage loan to purchase residential real estate in Luxembourg for non-commercial purposes. The measure also applies if the borrower uses a legal structure like a real estate investment company to complete this transaction, and in the case of joint applications. ‘Residential real estate’ includes construction land, whether the construction work takes place immediately after the purchase or years after. The measure also applies if a loan is granted to a borrower for purchasing a property with a long-term lease agreement. The real estate property may be for owner occupation or buy to let.

                           II.   Reciprocation

                                 5.

                                 Member States whose credit institutions, insurance corporations and professionals carrying out lending activities (mortgage lenders) have relevant material Luxembourg credit exposures through direct cross-border credit are recommended to reciprocate the Luxembourg measure in their jurisdiction. If the same measure is not available in their jurisdiction for all relevant cross-border exposures, the relevant authorities should apply available measures that have the most equivalent effect to the activated macroprudential policy measure.

                                 6.

                                 Member States should notify the ESRB that they reciprocated the Luxembourg measure or used de minimis exemptions in accordance with Recommendation D of Recommendation ESRB/2015/2. The notification should be provided no later than one month after the reciprocating measure has been adopted, using the respective template published on the ESRB’s website. The ESRB will publish the notifications on the ESRB’s website, thereby communicating the national reciprocation decisions to the public. This publication will include any exemptions made by reciprocating Member States and their commitment to monitor leakages and act if needed.

                                 7.

                                 Member States are recommended to reciprocate a measure within three months from the publication of this Recommendation in the Official Journal of the European Union.

                           III.   Materiality threshold

                                 8.

                                 The measure is complemented by two materiality thresholds to steer the potential application of the de minimis principle by the reciprocating Member States: a country-specific materiality threshold and an institution-specific materiality threshold. The country-specific materiality threshold for the total cross-border mortgage lending to Luxembourg is EUR 350 million which corresponds to approximately 1% of the total domestic residential real estate mortgage market in December 2020. The institution-specific materiality threshold for the total cross-border mortgage lending to Luxembourg is EUR 35 million which corresponds to approximately 0,1 % of the total domestic residential real estate mortgage market in Luxembourg in December 2020. Reciprocation is only requested when both the country-specific threshold and the institution-specific threshold are exceeded.

                        Sweden

                           A credit institution-specific floor of 25 per cent for the exposure-weighted average of the risk weights applied to the portfolio of retail exposures to obligors residing in Sweden secured by immovable property in accordance with Article 458(2)(d)(vi) of Regulation (EU) No 575/2013 to credit institutions authorised in Sweden, using the IRB Approach for calculating regulatory capital requirements.

                     I.   Description of the measure

                                 1.

                                 The Swedish measure, applied in accordance with Article 458(2)(d)(vi) of Regulation (EU) No 575/2013 and imposed on credit institutions authorised in Sweden using the IRB Approach, consists of a credit institution-specific floor of 25 per cent for exposure-weighted average of the risk weights applied to the portfolio of retail exposures to obligors residing in Sweden secured by immovable property.

                                 2.

                                 The exposure-weighted average is the average of the risk weights of the individual exposures calculated in accordance with Article 154 of Regulation (EU) No 575/2013, weighted by the relevant exposure value.

                           II.   Reciprocation

                                 3.

                                 In accordance with Article 458(5) of Regulation (EU) No 575/2013, relevant authorities of the Member States concerned are recommended to reciprocate the Swedish measure by applying it to branches located in Sweden of domestically authorised credit institutions using the IRB Approach within the deadline specified in sub-recommendation C(3).

                                 4.

                                 Relevant authorities are recommended to reciprocate the Swedish measure by applying it to domestically authorised credit institutions using the IRB Approach that have direct retail exposures to obligors residing in Sweden secured by immovable property. In accordance with sub-recommendation C(2), the relevant authorities are recommended to apply the same measure as the one that has been implemented in Sweden by the activating authority within the deadline specified in sub-recommendation C(3).

                                 5.

                                 If the same macroprudential policy measure is not available in their jurisdiction, the relevant authorities are recommended to apply, following consultation with the ESRB, a macroprudential policy measure available in their jurisdiction that has the most equivalent effect to the above measure recommended for reciprocation. Relevant authorities are recommended to adopt the equivalent measure by no later than four months following the publication of this Recommendation in the Official Journal of the European Union.

                           III.   Materiality threshold

                                 6.

                                 The measure is complemented by an institution-specific materiality threshold of SEK 5 billion to steer the potential application of the de minimis principle by the relevant authorities reciprocating the measure.

                                 7.

                                 In line with Section 2.2.1 of Recommendation ESRB/2015/2, relevant authorities of the Member State concerned may exempt individual domestically authorised credit institutions using the IRB Approach having non-material retail exposures to obligors residing in Sweden secured by immovable property which are below the materiality threshold of SEK 5 billion. When applying the materiality threshold, the relevant authorities should monitor the materiality of exposures and are recommended to apply the Swedish measure to previously exempted individual domestically authorised credit institutions when the materiality threshold of SEK 5 billion is exceeded.

                                 8.

                                 Where there are no credit institutions authorised in the Member States concerned with branches located in Sweden or which have direct retail exposures to obligors residing in Sweden, secured by immovable property, which use the IRB Approach and which have retail exposures of SEK 5 billion or above to obligors residing in Sweden, secured by immovable property, relevant authorities of the Member States concerned may, pursuant to Section 2.2.1 of Recommendation ESRB/2015/2, decide not to reciprocate the Swedish measure. In this case the relevant authorities should monitor the materiality of the exposures and are recommended to reciprocate the Swedish measure when a credit institution using the IRB Approach exceeds the threshold of SEK 5 billion.

                                 9.

                                 In line with Section 2.2.1 of Recommendation ESRB/2015/2, the materiality threshold of SEK 5 billion is a recommended maximum threshold level. Reciprocating relevant authorities may therefore, instead of applying the recommended threshold, set a lower threshold for their jurisdictions where appropriate, or reciprocate the measure without any materiality threshold.

               .

               (*1)  Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013 on the European system of national and regional accounts in the European Union (OJ L 174, 26.6.2013, p. 1).

               (*2)  Commission Implementing Regulation (EU) No 680/2014 of 16 April 2014 laying down implementing technical standards with regard to supervisory reporting of institutions according to Regulation (EU) No 575/2013 of the European Parliament and of the Council (OJ L 191, 28.6.2014, p. 1).’

               (1)  Recommandation du comité du risque systémique du 9 novembre 2020 relative aux crédits portant sur des biens immobiliers à usage résidentiel situés sur le territoire du Luxembourg (CRS/2020/005).

               (2)  CSSF Regulation N.20-08 du 3 décembre 2020 fixant des conditions pour l’octroi de crédits relatifs à des biens immobiliers à usage résidentiel situés sur le territoire du Luxembourg.


title: Council Recommendation (EU) 2021/2150 of 2 December 2021 amending Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction

text:
                  6.12.2021

                  EN

                  Official Journal of the European Union

                  L 434/8

         COUNCIL RECOMMENDATION (EU) 2021/2150
         of 2 December 2021
         amending Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction
         THE COUNCIL OF THE EUROPEAN UNION,
         Having regard to the Treaty on the Functioning of the European Union, and in particular Article 77(2) (b) and (e) and Article 292, first and second sentence thereof,
         Whereas:

                     (1)

                     On 30 June 2020, the Council adopted a Recommendation on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction (1) (‘Council Recommendation’).

                     (2)

                     Since then, the Council adopted Recommendations (EU) 2020/1052 (2), (EU) 2020/1144 (3), (EU) 2020/1186 (4), (EU) 2020/1551 (5), (EU) 2020/2169 (6), (EU) 2021/89 (7), (EU) 2021/132 (8), (EU) 2021/767 (9), (EU) 2021/892 (10), (EU) 2021/992 (11), (EU) 2021/1085 (12), (EU) 2021/1170 (13), (EU) 2021/1346 (14), (EU) 2021/1459 (15), (EU) 2021/1712 (16), (EU) 2021/1782 (17), (EU) 2021/1896 (18), (EU) 2021/1945 (19) and (EU) 2021/2022 (20) amending Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction.

                     (3)

                     On 20 May 2021, the Council adopted Recommendation (EU) 2021/816 amending Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction (21) in order to update the criteria used to assess whether non-essential travel from third countries is safe and should be allowed.

                     (4)

                     The Council Recommendation provides that Member States should gradually lift the temporary restriction on non-essential travel to the EU as from 1 July 2020 in a coordinated manner with regard to the residents of the third countries listed in Annex I to the Council Recommendation. Every 2 weeks, the list of third countries referred to in Annex I should be reviewed, and as the case may be updated, by the Council, after close consultation with the Commission and the relevant EU agencies and services following an overall assessment based on the methodology, criteria and information referred to in the Council Recommendation.

                     (5)

                     Discussions have since then taken place within the Council, in close consultation with the Commission and the relevant EU agencies and services, on the review of the list of third countries set out in Annex I to the Council Recommendation and in application of the criteria and methodology laid down in the Council Recommendation, as amended by Recommendation (EU) 2021/816. As a result of these discussions, the list of third countries set out in Annex I should be amended. In particular, Jordan and Namibia should be removed from the list.

                     (6)

                     Border control is in the interest not only of the Member State at whose external borders it is carried out but of all Member States which have abolished internal border control. Member States should therefore ensure that measures taken at the external borders are coordinated in order to ensure a well functioning Schengen area. To that end, as of 2 December 2021, Member States should continue lifting the temporary restriction on non-essential travel into the EU in a coordinated manner with regard to the residents of the third countries, Special Administrative Regions and other entities and territorial authorities listed in Annex I of the Council Recommendation as amended by this Recommendation.

                     (7)

                     In accordance with Articles 1 and 2 of Protocol No 22 on the Position of Denmark annexed to the Treaty on European Union and to the TFEU, Denmark is not taking part in the adoption of this Recommendation and is not bound by it or subject to its application. Given that this Recommendation builds upon the Schengen acquis, Denmark shall, in accordance with Article 4 of the said Protocol, decide within a period of 6 months after the Council has decided on this Recommendation whether it will implement it.

                     (8)

                     This Recommendation constitutes a development of the provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC (22); Ireland is therefore not taking part in its adoption and is not bound by it or subject to its application.

                     (9)

                     As regards Iceland and Norway, this Recommendation constitutes a development of the provisions of the Schengen acquis within the meaning of the Agreement concluded by the Council of the European Union and the Republic of Iceland and the Kingdom of Norway concerning the latter’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1, point A, of Council Decision 1999/437/EC (23).

                     (10)

                     As regards Switzerland, this Recommendation constitutes a development of the provisions of the Schengen acquis within the meaning of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1, point A, of Decision 1999/437/EC (24) read in conjunction with Article 3 of Council Decision 2008/146/EC (25).

                     (11)

                     As regards Liechtenstein, this Recommendation constitutes a development of provisions of the Schengen acquis within the meaning of the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1 point A, of Decision 1999/437/EC (26) read in conjunction with Article 3 of Decision 2011/350/EU (27),

               HAS ADOPTED THIS RECOMMENDATION:
         Council Recommendation (EU) 2020/912, as amended by Recommendations (EU) 2020/1052, (EU) 2020/1144, (EU) 2020/1186, (EU) 2020/1551, (EU) 2020/2169, (EU) 2021/89, (EU) 2021/132, (EU) 2021/767, (EU) 2021/816, (EU) 2021/892, (EU) 2021/992, (EU) 2021/1085, (EU) 2021/1170, (EU) 2021/1346, (EU) 2021/1459, (EU) 2021/1712, (EU) 2021/1782, (EU) 2021/1896, (EU) 2021/1945 and (EU) 2021/2022, on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction is amended as follows:

                     (1)

                     First paragraph of point 1 of the Council Recommendation is replaced by the following:

                                 ‘1.

                                 As from 2 December 2021, Member States should gradually lift the temporary restriction on non-essential travel to the EU in a coordinated manner with regard to the residents of the third countries listed in Annex I.’

                     (2)

                     Annex I to the Recommendation is replaced by the following:

                           ‘ANNEX I
                           Third countries, Special Administrative Regions and other entities and territorial authorities whose residents should not be affected by temporary external borders restriction on non-essential travel into the EU:
                           I.   STATES

                                       1.

                                       ARGENTINA

                                       2.

                                       AUSTRALIA

                                       3.

                                       BAHRAIN

                                       4.

                                       CANADA

                                       5.

                                       CHILE

                                       6.

                                       COLOMBIA

                                       7.

                                       INDONESIA

                                       8.

                                       KUWAIT

                                       9.

                                       NEW ZEALAND

                                       10.

                                       PERU

                                       11.

                                       QATAR

                                       12.

                                       RWANDA

                                       13.

                                       SAUDI ARABIA

                                       14.

                                       SOUTH KOREA

                                       15.

                                       UNITED ARAB EMIRATES

                                       16.

                                       URUGUAY

                                       17.

                                       CHINA (*)

                                 II.   SPECIAL ADMINISTRATIVE REGIONS OF THE PEOPLE’S REPUBLIC OF CHINA

                           Hong Kong SAR
                           Macao SAR
                           III.   ENTITIES AND TERRITORIAL AUTHORITIES THAT ARE NOT RECOGNISED AS STATES BY AT LEAST ONE MEMBER STATE

                           Taiwan

                        (*)  subject to confirmation of reciprocity"

            Done at Brussels, 2 December 2021.

                  For the Council

                  The President

               J. VRTOVEC

            (1)  OJ L 208I, 1.7.2020, p. 1.

            (2)  OJ L 230, 17.7.2020, p. 26.

            (3)  OJ L 248, 31.7.2020, p. 26.

            (4)  OJ L 261, 11.8.2020, p. 83.

            (5)  OJ L 354, 26.10.2020, p. 19.

            (6)  OJ L 431, 21.12.2020, p. 75.

            (7)  OJ L 33, 29.1.2021, p. 1.

            (8)  OJ L 41, 4.2.2021, p. 1.

            (9)  OJ L 165I, 11.5.2021, p. 66.

            (10)  OJ L 198, 4.6.2021, p. 1.

            (11)  OJ L 221, 21.6.2021, p. 12.

            (12)  OJ L 235, 2.7.2021, p. 27.

            (13)  OJ L 255, 16.7.2021, p. 3.

            (14)  OJ L 306, 31.8.2021, p. 4.

            (15)  OJ L 320, 10.9.2021, p. 1.

            (16)  OJ L 341, 24.9.2021, p. 1.

            (17)  OJ L 360, 11.10.2021, p. 128.

            (18)  OJ L 388, 3.11.2021, p. 1.

            (19)  OJ L 397, 10.11.2021, p. 28.

            (20)  OJ L 413, 19.11.2021, p. 37.

            (21)  OJ L 182, 21.5.2021, p. 1.

            (22)  Council Decision 2002/192/EC of 28 February 2002 concerning Ireland’s request to take part in some of the provisions of the Schengen acquis (OJ L 64, 7.3.2002, p. 20).

            (23)  OJ L 176, 10.7.1999, p. 31.

            (24)  OJ L 53, 27.2.2008, p. 52.

            (25)  Council Decision 2008/146/EC of 28 January 2008 on the conclusion, on behalf of the European Community, of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis (OJ L 53, 27.2.2008, p. 1).

            (26)  OJ L 160, 18.6.2011, p. 21.

            (27)  Council Decision 2011/350/EU of 7 March 2011 on the conclusion, on behalf of the European Union, of the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis, relating to the abolition of checks at internal borders and movement of persons (OJ L 160, 18.6.2011, p. 19).


title: Commission Recommendation (EU) 2022/210 of 8 February 2022 on a common Union toolbox to address semiconductor shortages and an EU mechanism for monitoring the semiconductor ecosystem

text:
               17.2.2022

               EN

               Official Journal of the European Union

               L 35/17

      COMMISSION RECOMMENDATION (EU) 2022/210
      of 8 February 2022
      on a common Union toolbox to address semiconductor shortages and an EU mechanism for monitoring the semiconductor ecosystem
      THE EUROPEAN COMMISSION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
      Whereas:

                  (1)

                  Semiconductors are essential to the functioning of our modern economy and society. Within the past year, the Union has witnessed unprecedented disruptions in their supply which have entailed serious delays and negative effects on important economic sectors and have led to delays to the repair and maintenance of essential products for critical sectors, such as medical and diagnostic equipment.

                  (2)

                  The current semiconductor shortage crisis and its ripple effects therefore render critical sectors such as health, transport, energy, defence, security and space under threat of being affected. The Union’s green and digital transition is at risk of delay.

                  (3)

                  Against that background, the Commission Proposal for a Regulation of the European Parliament and the Council establishing a framework of measures for strengthening Europe’s semiconductor ecosystem (Chips Act) (1) aims to address the Union’s resilience to disruptions in the semiconductor supply chain, to foster the development of capacities in advanced manufacturing, design and system integration as well as cutting-edge industrial manufacturing within the Union, to address the acute skills shortage, to increase qualified workforce and to contribute to creating a resilient and dynamic semiconductor ecosystem in the Union. The Union is committed to its strategic goal to reach at least 20 % of world production in value of cutting-edge, innovative and sustainable semiconductors by 2030, as set out in the Digital Decade Policy Programme (2).

                  (4)

                  This Recommendation accompanies the proposed Regulation as a tool with immediate effect to enable a rapid and coordinated Union response to the current shortage. To that end, it proposes to set up a coordination mechanism to discuss and decide on timely and proportionate crisis response measures.

                  (5)

                  In view of the structural deficiencies of the semiconductor supply chain, it additionally recommends measures to enable coordinated monitoring of the semiconductor value chain, focussing on risks that may disrupt, compromise or negatively affect the supply of semiconductors. Those measures should prepare and enable the permanent mechanism for monitoring of the semiconductor supply chain proposed under the Regulation.

                  (6)

                  The Commission has set up the European Semiconductor Expert Group, for the purpose of implementing this Recommendation. The European Semiconductor Expert Group will serve as a platform for coordination between Member States and provide advice and assistance to the Commission in the implementation of the forthcoming Regulation. The tasks of the European Semiconductor Expert Group shall be taken over by the European Semiconductor Board to be established in the Regulation.

                  (7)

                  The European Semiconductor Expert Group should facilitate rapid and effective information exchange between the Member States and the Commission on market developments that put Union supplies at tangible risk, and foster a uniform and coordinated crisis response.

                  (8)

                  As a first measure, Member States are recommended to request information from representative organisations of undertakings or, if necessary, from individual semiconductor and equipment manufacturers. This would increase the ability of the European Semiconductor Expert Group to identify and tailor potential crisis response measures. The data gathered should concern the production capability, production capacity and current primary disruptions and bottlenecks. Any collection or exchange of information should be in line with applicable rules on data sharing and confidentiality of information and data.

                  (9)

                  This Recommendation includes suggestions for crisis response measures that Member States are invited to discuss and consider to implement where relevant and proportionate.

                  (10)

                  If the assessment of the crisis at hand so requires, Member States could consider entering into a dialogue asking semiconductor manufacturers established in the Union to prioritise contracts with companies who supply products to critical sectors, with a view to ensure that these sectors continue to operate.

                  (11)

                  Furthermore, if relevant and appropriate according to the assessment of the crisis at hand, Member States may consider granting a mandate to the Commission to procure certain products on their behalf, in order to create a leverage effect through its purchasing power and to ensure the supply to critical sectors in the public interest.

                  (12)

                  Finally, Member States are encouraged to assess whether the Union should exercise surveillance over certain exports for securing supply to the internal market. If they find such protective measures appropriate, necessary and proportionate, they could discuss and request the Commission to assess whether the conditions for protective measures with regard to exports pursuant to Regulation (EU) 2015/479 of the European Parliament and of the Council (3) are fulfilled.

                  (13)

                  The recommended monitoring action should follow the principles of anticipation, coordination and preparedness with a view to establish an early warning system in order to prevent semiconductor crises and to strengthen the Union’s semiconductor ecosystem. To that end, Member States are asked to discuss in the European Semiconductor Expert Group appropriate early warning indicators to anticipate future shortages in the semiconductor supply chain.

                  (14)

                  Further in-depth assessment is needed as regards the risks that may disrupt, compromise or negatively affect the value chain, including on the origins and sources of supplies beyond the Union. Therefore, Member States are recommended to gather relevant information and cooperate with a view to enable the Commission to prepare a common risk assessment for the semiconductor value chain in the Union. Factors to be taken into account when preparing the risk assessments should be indicated.

                  (15)

                  The Commission sets out in the proposed Regulation a permanent and binding mechanism for a coordinated monitoring and crisis response, which builds upon the measures suggested in this Recommendation. Once the Regulation enters into force, this Recommendation may be repealed.

            HAS ADOPTED THIS RECOMMENDATION:
      1.   PURPOSE OF THIS RECOMMENDATION

                  (1)

                  The purpose of this Recommendation is to enable a rapid, effective and coordinated Union response to the current semiconductor shortage and to future similar cases.

                  (2)

                  This Recommendation will therefore enable a monitoring mechanism in light of the structural deficiencies of the semiconductor supply and the prevailing risk of future shortages or other notable market shocks arising.

                  (3)

                  To that end, it is recommended that Member States work together with the Commission through the framework of the European Semiconductor Expert Group, which will coordinate immediate crisis response measures and function as a platform for monitoring the semiconductor value chain, focussing on risks that may disrupt, compromise or negatively affect the supply of semiconductors.

            2.   DEFINITIONS

                  (4)

                  For the purpose of this Recommendation, the definitions set out in the proposed Regulation apply.

            3.   EUROPEAN SEMICONDUCTOR EXPERT GROUP

                  (5)

                  It is recommended that Member States implement this Recommendation through the European Semiconductor Expert Group. The general rules of procedure of this expert group apply.

            4.   IMMEDIATE CRISIS RESPONSE

                  (6)

                  As a matter of urgency, Member States should convene in the European Semiconductor Expert Group in order to exchange information on the current state of the semiconductor crisis in their national markets. In particular, they should assess the concrete products and markets affected by the shortage, as well as discuss any contingency measures that have been implemented at national level.

                  (7)

                  Member States should request information from representative organisation of undertakings or, if necessary, from individual semiconductor and equipment manufacturers on supply capabilities, which may include information on production capability, production capacity and current primary disruptions, with a view to identify and tailor potential crisis response measures. Any collection or exchange of information should be in line with applicable rules on data sharing and confidentiality of information and data.

                  (8)

                  Based on this information, Member States are invited to assess appropriate, effective and proportionate crisis response measures at national and Union level (crisis toolbox). These measures could include one or more of the following:

                              (a)

                              engaging in dialogue with and asking manufacturers to prioritize the production of crisis-relevant products to ensure critical sectors continue to operate;

                              (b)

                              considering, where appropriate, to grant to the Commission a mandate to act as a central purchasing body on behalf of two or more Member States for public procurement of crisis-relevant products for certain critical sectors;

                              (c)

                              assessing whether the Union should exercise surveillance over exports of crisis-relevant products and issue a request to the Commission to assess whether the conditions for protective measures with regard to exports pursuant to of Regulation (EU) 2015/479 are fulfilled;

                              (d)

                              entering into coordinated consultations or cooperation with relevant third countries with a view to seeking cooperative solutions to address supply chain disruptions, in compliance with international obligations. This may involve, where appropriate, coordination in relevant international fora.

                  (9)

                  To ensure a coordinated approach, Member States should inform the Commission in a timely manner of all national measures taken with regard to the semiconductor supply chain.

            5.   MONITORING

                  (10)

                  Member States should carry out regular monitoring of the semiconductor value chain, focussing on risks that may disrupt, compromise or negatively affect the supply of semiconductors.

                  (11)

                  To that end, Member States should identify appropriate early warning indicators with a view to anticipate future disturbances of the semiconductor supply chain.

                  (12)

                  Member States should provide to the Commission information for the purpose of mapping factors, trends and events that could lead to significant disruptions of the global semiconductor value chain with repercussions in the Union (Union risk assessment). Relevant factors to be taken into account could include:

                              (a)

                              availability and integrity of the services or goods of undertakings in the semiconductor sector in the Union the functioning of which is essential for the semiconductor supply chain;

                              (b)

                              the rate at which demand fluctuates for different types of semiconductors, also in relation to available manufacturing capacities;

                              (c)

                              gaps and bottlenecks in manufacturing, packaging and logistics, including shortages in raw materials and available qualified workforce;

                              (d)

                              accidents, attacks, natural disasters or other serious events with the potential of affecting the semiconductor supply chain;

                              (e)

                              technical, regulatory or environmental changes reducing manufacturing yield;

                              (f)

                              concentration of supply with regard to geographical areas and companies, taking into consideration network and lock-in effects;

                              (g)

                              impacts of trade policies, tariffs, trade barriers and other trade related measures;

                              (h)

                              authenticity and integrity of semiconductors, possible impact of counterfeit semiconductors;

                              (i)

                              infringement or theft of intellectual property or trade secrets.

                  (13)

                  Member States should identify the main categories of users of semiconductors, especially those from critical sectors. They should invite relevant stakeholder organisations, including industry associations and representatives of the main user categories, to provide information regarding atypical increases in demand and known disruptions of their supply chain, including the unavailability of critical semiconductors or raw materials, longer than average lead-time, delays in delivery and exceptional price surges.

                  (14)

                  Member States should immediately alert the Commission where they become aware of a potential disruption of the supply of semiconductor, an atypical increase in demand or have concrete and reliable information of any other risk factor or event materialising.

            6.   REVIEW

                  (15)

                  The Recommendation may be repealed following the entry into force of the proposed Regulation.

         Done at Brussels, 8 February 2022.

               For the Commission

            Thierry BRETON

               Member of the Commission

         (1)  COM(2022) 46, 8.2.2022.

         (2)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, 2030 Digital Compass: the European way for the Digital Decade, 9.3.2021 COM(2021) 118 final).

         (3)  Regulation (EU) 2015/479 of the European Parliament and of the Council of 11 March 2015 on common rules for exports (OJ L 83, 27.3.2015, p. 34).


title: Recommendation of the European Central Bank of 16 July 2021 to the Council of the European Union on the external auditors of Banka Slovenije (ECB/2021/28) 2021/C 299/01

text:
               27.7.2021

               EN

               Official Journal of the European Union

               C 299/1

      RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
      of 16 July 2021
      to the Council of the European Union on the external auditors of Banka Slovenije
      (ECB/2021/28)
      (2021/C 299/01)
      THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
      Having regard to the Treaty on the Functioning of the European Union,
      Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 27.1 thereof,
      Whereas:

                  (1)

                  The accounts of the European Central Bank (ECB) and the national central banks of the Member States whose currency is the euro are audited by independent external auditors recommended by the ECB’s Governing Council and approved by the Council of the European Union.

                  (2)

                  The mandate of Banka Slovenije’s current external auditors, Ernst & Young revizija, poslovno svetovanje, d.o.o., ended following the audit for the financial year 2020. It is therefore necessary to appoint external auditors from the financial year 2021 onwards.

                  (3)

                  Banka Slovenije has selected PricewaterhouseCoopers, podjetje za revizijo in druge finančno računovodske storitve, d. o. o. as its external auditors for the financial years 2021 to 2023,

            HAS ADOPTED THIS RECOMMENDATION:
      It is recommended that PricewaterhouseCoopers, podjetje za revizijo in druge finančno računovodske storitve, d. o. o. should be appointed as the external auditors of Banka Slovenije for the financial years 2021 to 2023.

         Done at Frankfurt am Main, 16 July 2021.

               The President of the ECB

            Christine LAGARDE


title: Recommendation of the European Central Bank of 16 July 2021 to the Council of the European Union on the external auditors of the Banco de España (ECB/2021/29) 2021/C 299/02

text:
               27.7.2021

               EN

               Official Journal of the European Union

               C 299/2

      RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
      of 16 July 2021
      to the Council of the European Union on the external auditors of the Banco de España
      (ECB/2021/29)
      (2021/C 299/02)
      THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
      Having regard to the Treaty on the Functioning of the European Union,
      Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 27.1 thereof,
      Whereas:

                  (1)

                  The accounts of the European Central Bank (ECB) and the national central banks of the Member States whose currency is the euro are audited by independent external auditors recommended by the ECB’s Governing Council and approved by the Council of the European Union.

                  (2)

                  In 2018, the Banco de España selected Mazars Auditores, S.L.P. - Mazars, S.A. as its external auditors for the financial years 2018 to 2020, with an option to extend the mandate to the financial years 2021 to 2022, and the Governing Council of the ECB recommended that appointment as well as the option to extend the mandate to the financial years 2021 and 2022 (1).

                  (3)

                  The mandate of the Banco de España’s current external auditors, Mazars Auditores, S.L.P. - Mazars, S.A., ended after the audit for the financial year 2020. It is therefore necessary to appoint external auditors for the financial years 2021 and 2022.

                  (4)

                  The Banco de España intends to extend the mandate of Mazars Auditores, S.L.P. - Mazars, S.A. to the financial years 2021 and 2022 as contemplated by Recommendation ECB/2018/22 and the recitals to Council Decision (EU) 2018/1518 (2). This extension is possible in accordance with the contractual arrangements between the Banco de España and Mazars Auditores, S.L.P. - Mazars, S.A.,

            HAS ADOPTED THIS RECOMMENDATION:
      It is recommended that the temporary association of undertakings Mazars Auditores, S.L.P. - Mazars, S.A. should be appointed as the external auditors of the Banco de España for the financial years 2021 and 2022.

         Done at Frankfurt am Main, 16 July 2021.

               The President of the ECB

            Christine LAGARDE

         (1)  Recommendation ECB/2018/22 of the European Central Bank of 6 September 2018 to the Council of the European Union on the external auditors of Banco de España (OJ C 325, 14.9.2018, p. 1).

         (2)  Council Decision (EU) 2018/1518 of 9 October 2018 amending Decision 1999/70/EC concerning the external auditors of the national central banks, as regards the external auditors of Banco de España (OJ L 256, 12.10.2018, p. 63)


title: Council Recommendation of 18 June 2021 delivering a Council opinion on the 2021 Stability Programme of Belgium

text:
               29.7.2021

               EN

               Official Journal of the European Union

               C 304/1

      COUNCIL RECOMMENDATION
      of 18 June 2021
      delivering a Council opinion on the 2021 Stability Programme of Belgium
      (2021/C 304/01)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union,
      Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
      Having regard to the recommendation of the European Commission,
      Having regard to the resolutions of the European Parliament,
      After consulting the Economic and Financial Committee,
      Whereas:

                  (1)

                  On 20 March 2020, the Commission adopted a communication on the activation of the general escape clause of the Stability and Growth Pact. The general escape clause, as set out in Articles 5(1), 6(3), 9(1) and 10(3) of Regulation (EC) No 1466/97 and Articles 3(5) and 5(2) of Council Regulation (EC) No 1467/97 (2), facilitates the coordination of budgetary policies in times of severe economic downturn. In that communication, the Commission set out its view that, given the expected severe economic downturn resulting from the COVID-19 pandemic, the conditions for activating the general escape clause were met. On 23 March 2020, the ministers of finance of the Member States agreed with the assessment of the Commission. The general escape clause has granted Member States budgetary flexibility to deal with the COVID-19 crisis. It has facilitated the coordination of budgetary policies in times of severe economic downturn. Its activation allows for a temporary departure from the adjustment path towards the medium-term budgetary objective of each Member State, provided that this does not endanger fiscal sustainability in the medium term. On 17 September 2020, in its communication on the 2021 Annual Sustainable Growth Strategy, the Commission announced that the general escape clause would remain active in 2021.

                  (2)

                  On 20 July 2020, the Council adopted a Recommendation (3) (‘the Council Recommendation of 20 July 2020’). It recommended Belgium to take all necessary measures, in line with the general escape clause, to effectively address the COVID-19 pandemic, sustain the economy and support the ensuing recovery. It also recommended Belgium to pursue, when economic conditions allow, fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability, while enhancing investment.

                  (3)

                  The 2021 Council Recommendation on the economic policy of the euro area indicates that fiscal policies should remain supportive in all euro-area Member States throughout 2021 and that policy measures should be tailored to country-specific circumstances and be timely, temporary and targeted. When the epidemiological and economic conditions allow, emergency measures should be phased out, while combatting the social and labour-market impact of the crisis. Member States should pursue fiscal policies that are aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability, while enhancing investment. Member States should pursue reforms that strengthen the coverage, adequacy and sustainability of health and social protection systems for all.

                  (4)

                  On 18 November 2020, the Commission adopted its opinions on the 2021 draft budgetary plans of the euro-area Member States, which were based on a qualitative assessment of the fiscal measures. The Commission was of the opinion that the draft budgetary plan of Belgium was overall in line with the fiscal policy recommendations set out in the Council Recommendation of 20 July 2020, and that most of the measures included in the draft budgetary plan supported economic activity against the background of considerable uncertainty.

                  (5)

                  Next Generation EU, including the Recovery and Resilience Facility, will ensure a sustainable, inclusive and fair recovery. Regulation (EU) 2021/241 of the European Parliament and of the Council (4), which established the Recovery and Resilience Facility, entered into force on 19 February 2021. The Recovery and Resilience Facility will provide financial support for the implementation of reforms and investment, entailing a fiscal impulse financed by the Union. It will contribute to the economic recovery and to the implementation of sustainable and growth-enhancing reforms and investment, in particular to promote the green and digital transitions, and will strengthen the resilience and potential growth of the Member States’ economies. It will also help public finances to return to more favourable positions in the near term and will contribute to strengthening sustainable public finances and to growth and job creation in the medium and long term.

                  (6)

                  On 3 March 2021, the Commission adopted a communication providing further policy orientations to facilitate the coordination of fiscal policies and the preparation of Member States’ Stability and Convergence Programmes. The overall fiscal stance, taking into account national budgets and the Recovery and Resilience Facility, should remain supportive in 2021 and 2022. At the same time, given the expectation that economic activity will gradually normalise in the second half of 2021, Member States’ fiscal policies should become more differentiated in 2022. Member States’ fiscal policies should take into account the state of the recovery, fiscal sustainability and the need to reduce economic, social and territorial divergences. In view of the need to support a sustainable recovery for the Union, Member States with low sustainability risks should gear their budgets towards maintaining a supportive fiscal policy in 2022, taking into account the impact of the Recovery and Resilience Facility. Member States with high debt levels should pursue prudent fiscal policies, while preserving nationally financed investment and making use of grants under the Recovery and Resilience Facility to fund additional high-quality investment projects and structural reforms. For the period beyond 2022, fiscal policies should continue to take into account the strength of the recovery, the degree of economic uncertainty and fiscal sustainability considerations. A refocusing of fiscal policies towards achieving prudent medium-term fiscal positions, including by phasing out support measures in due course, will contribute to ensuring fiscal sustainability in the medium term.

                  (7)

                  In its communication of 3 March 2021, the Commission also took the view that the decision on the deactivation or continued application of the general escape clause should be taken as an overall assessment of the state of the economy, with the level of economic activity in the Union or euro area compared to pre-crisis levels (end of 2019) as a key quantitative criterion. On the basis of the Commission’s 2021 spring forecast, on 2 June 2021 the Commission considered that the conditions for continuing to apply the general escape clause in 2022 and for deactivating it as of 2023 were met. Country-specific situations will continue to be taken into account after the deactivation of the general escape clause.

                  (8)

                  On 30 April 2021, Belgium submitted its 2021 Stability Programme, in line with Article 4 of Regulation (EC) No 1466/97.

                  (9)

                  In 2020, based on data validated by Eurostat, Belgium’s general government deficit was 9,4 % of gross domestic product (GDP), while general government debt increased to 114,1 % of GDP. The annual change in the primary budget balance amounted to -7,5 % of GDP, including discretionary budgetary measures of 4,5 % of GDP in support of the economy and the operation of automatic stabilisers. Belgium also provided liquidity support to companies and households (such as guarantees and tax deferrals, which do not have a direct and immediate budgetary impact) estimated at 11,8 % of GDP; the actual take-up of the public guarantees in 2020 is estimated by the Commission at below ½ % of GDP.

                  (10)

                  On 2 June 2021, the Commission issued a report under Article 126(3) of the Treaty. That report discusses the budgetary situation of Belgium, as its general government deficit in 2020 exceeded the 3 %-of-GDP Treaty reference value, while its general government debt exceeded the 60 %-of-GDP Treaty reference value and did not diminish at a satisfactory pace. The report concluded that the deficit criterion was not fulfilled and the debt criterion was not complied with.

                  (11)

                  The macroeconomic scenario underpinning the budgetary projections is realistic in 2021 and 2022. The 2021 Stability Programme projects real GDP to grow by 4,1 % and 3,5 % in 2021 and 2022, respectively. The Commission’s 2021 spring forecast projects slightly higher real growth in 2021 and 2022, at 4,5 % and 3,7 % respectively, driven by higher investment.

                  (12)

                  In its 2021 Stability Programme, the government plans a decrease in the general government deficit from 9,4 % of GDP in 2020 to 7,7 % of GDP in 2021, while the debt ratio is planned to increase to 116,3 % of GDP in 2021, from 114,1 % in 2020. According to the 2021 Stability Programme, the change in the primary budget balance in 2021 compared with the pre-crisis level (2019) is set to amount to -6,1 % of GDP, reflecting the discretionary budgetary measures of 2,7 % of GDP in support of the economy and the operation of automatic stabilisers. These projections are in line with the Commission’s 2021 spring forecast.

                  (13)

                  In response to the COVID-19 pandemic and related economic downturn, Belgium has adopted budgetary measures to strengthen the capacity of its health system, contain the COVID-19 pandemic and provide relief to those individuals and sectors that have been particularly affected. This forceful policy response has cushioned the contraction in GDP, which, in turn, has curtailed the increase in government deficit and public debt. Fiscal measures should maximise support to the recovery without pre-empting future fiscal trajectories. Therefore, measures should avoid creating a permanent burden on public finances. When Member States introduce permanent measures, they should properly fund them to ensure budgetary neutrality in the medium term. The measures taken by Belgium in 2020 and 2021 have been in line with the Council Recommendation of 20 July 2020. The discretionary budgetary measures adopted by the government in 2020 and 2021 are mostly temporary or matched by offsetting measures.

                  (14)

                  The 2021 Stability Programme does not include yet receipts of grants under the Recovery and Resilience Facility. Meanwhile, the Commission’s 2021 spring forecast assumes investments and reforms financed by grants under the Recovery and Resilience Facility amounting to 0,2 % of GDP in 2021 and 0,3 % of GDP in 2022, following the same hypothesis as used by the Belgian Federal Planning Bureau in its macroeconomic evaluation of the Recovery and Resilience Facility.

                  (15)

                  The established indicators of fiscal adjustment set out in Regulation (EC) No 1466/97 need to be considered in the context of the current circumstances. First, there is significant uncertainty surrounding output gap estimates. Second, there is a need for fiscal policy to stand ready to rapidly adapt to the evolution of the COVID-19 pandemic, shifting from emergency relief to more targeted measures once health risks diminish. Third, the current context is characterised by a significant policy response to support economic activity. In the presence of sizeable transfers from the Union budget (such as those from the Recovery and Resilience Facility), the established indicators do not capture the full impulse provided to the economy by fiscal policies. Against this background, the structural balance does not appear adequate in the current circumstances. The expenditure benchmark also needs to be adapted (5) and complemented with additional information in order to fully gauge the fiscal policy orientation.

                  (16)

                  As in the approach pursued in the assessment of the 2021 draft budgetary plans, temporary emergency measures have been excluded from the expenditure aggregate. These crisis-related temporary emergency measures support health systems and compensate workers and firms for the losses in income due to lockdowns and supply chain disruptions; their reversal by the public authorities is contingent on the return of the public health and economic situation to normality. To assess the overall fiscal stance at the current juncture, the sizeable transfers from the Union budget (such as those from the Recovery and Resilience Facility) should be included in the relevant expenditure aggregate. The overall fiscal stance is therefore measured by the change in primary expenditure (net of discretionary revenue measures and excluding crisis-related temporary emergency measures), including expenditure financed by grants under the Recovery and Resilience Facility and other Union funds. Going beyond the overall fiscal stance, the analysis also aims to assess whether national fiscal policy is prudent and its composition is conducive to a sustainable recovery consistent with the green and digital transitions. For that reason, particular attention is paid to the evolution of nationally financed primary current expenditure and investment.

                  (17)

                  In its 2021 Stability Programme, Belgium’s general government deficit is planned to decrease to 4,5 % of GDP in 2022, mainly due to a discontinuation of most of the temporary support measures adopted in 2020 and 2021 and to higher government revenue as a result of the improving macroeconomic situation. The general government debt ratio is planned to stabilise at 116 % of GDP in 2022. These projections are in line with the Commission’s 2021 spring forecast. Based on the Commission’s 2021 spring forecast, and on the basis of the specific methodology that reflects the above-mentioned challenges, the overall fiscal stance — including the impact on aggregate demand in 2022 from investment financed by both the national and Union budgets, in particular the Recovery and Resilience Facility — is estimated at -0,4 % of GDP (6). The positive contribution of expenditure financed by Recovery and Resilience Facility grants and other Union funds is projected to increase by 0,1 percentage point of GDP. Nationally financed investment is projected to provide a contractionary contribution of 0,1 percentage point of GDP (7). Nationally financed primary current expenditure (net of discretionary revenue measures) is projected to provide an expansionary contribution of 0,4 percentage point of GDP.

                  (18)

                  The quality of Member States’ budgetary measures appears particularly important. Fiscal structural reforms aimed at improving the composition of national budgets can support potential growth, create much-needed fiscal space and help to ensure fiscal sustainability over the longer term, including in view of climate change and health challenges. On the revenue side, the COVID-19 crisis has reinforced the importance of reforms for more efficient and fairer public revenue systems. On the expenditure side, it has made it even more crucial to increase the level and quality of sustainable and growth-enhancing investments, in a manner consistent with serving the objectives of enhancing growth potential, economic and social resilience and the green and digital twin transition. The national recovery and resilience plans will allow to improve the composition of national budgets.

                  (19)

                  According to the 2021 Stability Programme’s medium-term budgetary plans, the general government deficit is planned to decrease from 4 % of GDP in 2023 to 3,7 % of GDP in 2024. The general government deficit is not planned to return below 3 % of GDP over the 2021 Stability Programme’s horizon. The 2021 Stability Programme does not include the information required to estimate the overall fiscal stance in 2023 and 2024. The current estimate of the 10-year average nominal potential growth is 2¾ % (8). However, this estimate does not include the impact of the reforms that are part of the recovery and resilience plan and could therefore boost Belgium’s potential growth.

                  (20)

                  The general government debt ratio is planned to increase from 116,7 % of GDP in 2023 to 117,4 % of GDP in 2024, entirely due to stock-flow adjustments. In light of the high debt ratio, which is projected to only gradually fall over time, Belgium is considered to face high fiscal sustainability risks over the medium term, as per the latest debt sustainability analysis.

                  (21)

                  In view of the currently still exceptionally high degree of uncertainty, the fiscal policy guidance should remain predominantly qualitative. More precise quantified guidance for the later years should be provided in 2022, if the degree of uncertainty has sufficiently declined by then.

                  (22)

                  The Council has assessed the 2021 Stability Programme and the follow-up by Belgium to the Council Recommendation of 20 July 2020,

            HEREBY RECOMMENDS BELGIUM TO:

         1.

            In 2022, use the Recovery and Resilience Facility to finance additional investment in support of the recovery while pursuing a prudent fiscal policy. Preserve nationally financed investment.

         2.

            When economic conditions allow, pursue a fiscal policy aimed at achieving prudent medium-term fiscal positions and ensuring fiscal sustainability in the medium term. At the same time, enhance investment to boost growth potential.

         3.

            Pay particular attention to the composition of public finances, on both the revenue and expenditure sides of the budget, and to the quality of budgetary measures in order to ensure a sustainable and inclusive recovery. Prioritise sustainable and growth-enhancing investment, in particular investment supporting the green and digital transition. Give priority to fiscal structural reforms that will help provide financing for public policy priorities and contribute to the long-term sustainability of public finances, including, where relevant, by strengthening the coverage, adequacy and sustainability of health and social protection systems for all.

         Done at Luxembourg, 18 June 2021.

               For the Council

               The President

            J. LEÃO

         (1)  OJ L 209, 2.8.1997, p. 1.

         (2)  Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (OJ L 209, 2.8.1997, p. 6)

         (3)  Council Recommendation of 20 July 2020 on the 2020 National Reform Programme of Belgium and delivering a Council opinion on the 2020 Stability Programme of Belgium (OJ C 282, 26.8.2020, p. 1).

         (4)  Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17).

         (5)  In particular, the four-year smoothing of investment used in the expenditure benchmark does not allow for a proper assessment of the fiscal support for the recovery provided by nationally financed investments.

         (6)  A negative sign of the indicator corresponds to an excess of the primary expenditure growth compared with medium-term economic growth, which indicates an expansionary fiscal policy.

         (7)  Other nationally financed capital expenditure is projected to provide a neutral contribution.

         (8)  Estimated by the Commission, in accordance with the commonly agreed methodology.


title: Recommendation of the European Central Bank of 23 July 2021 repealing Recommendation ECB/2020/62 (ECB/2021/31) 2021/C 303/01

text:
               29.7.2021

               EN

               Official Journal of the European Union

               C 303/1

      RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
      of 23 July 2021
      repealing Recommendation ECB/2020/62
      (ECB/2021/31)
      (2021/C 303/01)
      THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
      Having regard to the Treaty on the Functioning of the European Union,
      Having regard to Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (1), and in particular Article 4(3) thereof,
      Whereas:

                  (1)

                  On 27 March 2020, the European Central Bank (ECB) adopted Recommendation ECB/2020/19 of the European Central Bank (2) which recommended that at least until 1 October 2020 no dividends are paid out and no irrevocable commitment to pay out dividends is undertaken by credit institutions and that credit institutions refrain from share buy-backs aimed at remunerating shareholders. On 27 July 2020, the ECB prolonged this recommendation until 1 January 2021 by adopting Recommendation ECB/2020/35 of the European Central Bank (3).

                  (2)

                  Even with the improvement in macroeconomic conditions and the reduction of economic uncertainty due to the COVID-19 pandemic, the level of uncertainty remained elevated at the end of 2020 with a continued impact on banks’ ability to forecast their medium-term capital needs. In view of this persisting uncertainty the ECB adopted Recommendation ECB/2020/62 of the European Central Bank (4) repealing Recommendation ECB/2020/35 but recommending extreme prudence when credit institutions decide on or pay out dividends or perform share buy-backs aimed at remunerating shareholders.

                  (3)

                  The latest macroeconomic projections indicate the start of the economic recovery and a further reduction in the level of economic uncertainty. Accordingly, the ECB considers that the reasons underpinning Recommendation ECB/2020/62 are no longer present. The reduced economic uncertainty allows the thorough supervisory assessment of the prudence of banks’ plans to distribute dividends and conduct share buybacks on an individual basis with a careful forward-looking assessment of capital plans in the context of the normal supervisory cycle,

            HAS ADOPTED THIS RECOMMENDATION:
      This Recommendation repeals Recommendation ECB/2020/62 from 30 September 2021.

         Done at Frankfurt am Main, 23 July 2021.

               The President of the ECB

            Christine LAGARDE

         (1)  OJ L 287, 29.10.2013, p. 63.

         (2)  Recommendation ECB/2020/19 of the European Central Bank of 27 March 2020 on dividend distributions during the COVID-19 pandemic and repealing Recommendation ECB/2020/1 (OJ C 102I, 30.3.2020, p. 1).

         (3)  Recommendation ECB/2020/35 of the European Central Bank of 27 July 2020 on dividend distributions during the COVID-19 pandemic and repealing Recommendation ECB/2020/19 (OJ C 251, 31.7.2020, p. 1).

         (4)  Recommendation ECB/2020/62 of the European Central Bank of 15 December 2020 on dividend distributions during the COVID-19 pandemic and repealing Recommendation ECB/2020/35 (OJ C 437, 18.12.2020, p. 1).