Published: 17.01.2024.
The Bank of Latvia has determined the priorities of the resolution and compensation system for 2024-2026. for the year, and the 2024 operational plan was approved in accordance with them. Both face-to-face inspections of market participants and other activities are planned.
The settlement activities cover credit institutions and investment brokerage companies (IBS), which are subject to the Law on Restoration and Resolution of Credit Institutions and Investment Brokerage Companies. On the other hand, activities in the field of the compensation system refer to the members of the Deposit Guarantee Fund (NGF), the investor protection system and the Insured Protection Fund.
The priorities of the settlement and compensation system provide that in 2024 the Bank of Latvia will carry out three face-to-face inspections (included in the total within the framework of inspections by the Bank of Latvia) and various off-site activities in order to achieve effective resolvability of the aforementioned institutions, as well as protection of the interests of clients – depositors, investors and insured persons – in cases of crisis.
The 2024 action plan for settlement and compensation systems includes five activities.
1. Credit institutions and IBS updating resolution plans and determining minimum requirements for equity and liabilities according to the business models and risks of credit institutions and IBS.
2. Operationalization of the application of regulatory instruments. This activity will be implemented within the framework of the structural support project of the European Commission “Technical support for Estonia, Lithuania and Latvia for the development of the national manual”. In the course of the project, it is planned to develop working documents (decisions, draft contracts, procedures, methodologies, etc.) for the application of resolution instruments.
3. Updating the action framework for a possible financial crisis situation. This activity includes several tasks:
- conduct a stress test in cross-border resolution,
- carry out a NGF stress test with the aim of checking the guaranteed compensation payment functions, NGF financing options,
- improve the functionality of the investor protection system and, in accordance with the requirements of the Investor Protection Law, develop regulations on disclosure of information to investors on protection measures and on the preparation of information on compensations to be paid.
4. Participation in the European Union’s new insurance settlement framework development process. Following the Insurance and Reinsurance Companies Recovery and Resolution Directive (The insurance recovery and resolution directive) approval, it is planned to introduce it into the national legislation and create an operational mechanism for the implementation of the new resolution framework.
5. Participation in the process of improving the framework of the European Union resolution and compensation system (Union crisis management and deposit insurance framework – CMDI). The purpose of the process is to make the system for preventing the insolvency of credit institutions more effective. You can learn more about this process here on the website of the European Commission and on the website of the European Parliament.
2024-01-17 12:51:55
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