On 25 September 2014, the European Banking Authority (EBA), launched a consultation on Guidelines on payment commitments to deposit guarantee schemes (DGS). The draft Guidelines have been developed in accordance with Article 10(3) of the Deposit Guarantee Schemes Directive (DGSD), which mandates the EBA to issue guidelines on payment commitments.
The proposed Guidelines lay down the requirements that will secure reliable funding for the DGS, notably a marking-to-market of the value of the collateral and the obligation for the credit institution to provide additional funding in case of deterioration. In addition, the Guidelines clarify the prudential treatment of payment commitments. In particular, within the supervisory review and evaluation process (SREP), competent authorities shall assess the risks to which the capital and liquidity positions of a credit institution would be exposed should the DGS call upon them to honour their commitment, which should be treated as a cash payment from a prudential point of view.
The consultation runs until 2 January 2015.