Comité du risque systémique / Systemic Risk Committee
The BCL is in charge of the secretariat of the Systemic Risk Committee.
Scope of liquidity supervision
According to the aforementioned Regulation, market operators within the scope of the BCL’s liquidity supervision are:
- Credit institutions, counterparties in monetary policy operations
- Other monetary financial institutions (IFM) and investment funds other than IFMs
- Other professionals of the financial sector (PSF)
- Insurance companies
- Pension funds
- Risk capital investment funds (SICAR)
- Securitization companies
- Issuers of payment instruments
- All other market operators accepted by the Banque centrale as counterparty in monetary policy operations
The primary focus of the Banque centrale’s surveillance of market operators is on credit institutions being counterparties in monetary policy operations. Furthermore, the supervision activity may cover all other market operators as listed above, whose activity could significantly influence the liquidity of credit institutions, the liquidity condition of financial markets or hamper the conduct of monetary policy operations.
All market operators should have an adequate framework for forward-looking liquidity management allowing them to fulfil their financial commitments. This framework should allow a management of the liquidity risk adapted to the volume and complexity of the activity of the operator. It should be based on an internal organisation that allows an efficient control of liquidity risk, consisting in particular of policies and procedures regarding liquidity management, which also comprises the management of financial guarantees as well as independent controlling.
Liquidity surveillance at Banque centrale is mainly based on the following pillars:
- Establishing a regulatory framework for the prudential surveillance of liquidity in consultation and cooperation with other supervisory authorities of the financial sector.
- Carrying out specific on-site inspections aiming at the evaluation of market operators on a regular basis by assessing the degree of compliance of their organisation, governance and internal procedures, regarding the liquidity risk management against applicable recommendations, standards or principles as defined by the ECB, CEBS, BCBS and others.
- Conducting ongoing quantitative analysis backed by specific analytical tools which have been developed for the profound assessment of liquidity risk exposure of market operators. These applied quantitative models are based on data collected via the regular statistical and prudential reporting (e.g. the Daily Liquidity Report provided by credit institutions) as well as from the Eurosystem and financial market data providers.
- Accomplishing periodic reporting that comprises quantitative and qualitative information from relevant market operators as well as regular contact with them.
