Filenews 23 January 2023
Public consultation on the new Legislative Framework for Crisis Management in the Banking Sector by the Ministry of Finance.
Specifically, the Ministry of Finance, in the context of the implementation of the reforms of its National Recovery and Resilience Plan (RRP) and specifically the reform (C3.5R1): Legal framework for crisis management in credit institutions, publishes this document, for the purpose of submitting views by stakeholders, on the draft Laws mentioned below. The reform aims to improve the resilience of the banking sector by establishing a framework for a coherent and concrete process to support credit institutions in financial difficulties.
The establishment of a legislative framework for crisis management in the banking sector is a key reform task of the Ministry of Finance in cooperation with the Central Bank of Cyprus, which is part of the third Policy Axis of the NRRP and in particular the component related to the safeguarding of fiscal and financial stability.
The following set of plans consists of both harmonising and national provisions.
(a) on the Provision of Extraordinary Public Financial Support to Licensed Credit Institutions Law of 2023
The bill in question aims to establish a procedure for the provision of support to solvent authorised credit institutions in accordance with Article 18(4)(d) of Regulation (EU) No 806/2014 and the provisions of article 32(4)(d) of Directive 2014/59, as adopted in article 32C(2)(d) of the Business of Credit Institutions Law, in order to address a serious disturbance in the economy and maintain financial stability in the Republic.
(b) the Business of Credit Institutions (Amendment) Law of 2023
The purpose of this Bill is to better harmonize with paragraph 4 of Article 32 of Directive 2014/59 / EU.
(c) The Financial Support in Resolution Law of 2023
The above Bill aims to exercise the discretionary options of Articles 37(10), 56, 57 and 58 of Directive 2014/59/EU, so that the resolution authority has the possibility, in the very exceptional case of systemic crisis, to intervene immediately to avoid the liquidation of the PPE or to achieve the resolution objectives, using public financial stabilisation tools (a tool of public capital support and temporary public ownership, under certain conditions. Public financial stabilisation tools are used as a last resort, after the other resolution tools have been assessed and exploited to the greatest extent possible.
The Ministry of Finance invites you to submit your comments or opinions, in Word format, by 20/2/2023 at the e-mail address mpapanicolaou@papd.mof.gov.cy and epitta@mof.gov.cy.
