EBA · 2023_6712 Rejected question

European Union Allowances (EUA) as credit risk mitigant

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
207
Topic
Credit risk
Submitted by
Credit institution
Submitted
2023-02-08
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Question

Could European Union Allowances (EUA) received by a credit institution as collateral be considered as eligible one from prudential point of view ? If yes, how EUA should be considered ? As financial collateral or as other physical collateral ?

Background

EU Allowances (EUA) are climate credits (or carbon credits) used in the European Union Emissions Trading Scheme (EU ETS). EU Allowances are issued by the EU Member States into Member State Registry accounts. EU Allowances are issued by the EU Member States into Member State Registry accounts. Such EUA are received by Europen Credit Institution in collateral of financing transaction (such reverse repos for example). The regulation 575/2013 is not clear regarding the prudential treatment of such collateral.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2023_6712

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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