Changes in the Restrictiveness of Macroprudential Regulations during the COVID-19 Pandemic. The Case of Capital Requirements for Banks in the Eurozone
DOI:
https://doi.org/10.33119/SIP.2021.182.2Keywords:
Eurozone, macroprudential policy, pandemic, capital requirements, restrictivenessAbstract
The article discusses the findings of the study that explored changes in the restrictiveness of the macroprudential policy in the euro area economies during the Covid-19 pandemic. The paper aims to show how and why the restrictiveness of macroprudential capital requirements in the Eurozone evolved between late 2019 and mid-2021. Qualitative and quantitative data analyses have shown that the relaxation of capital requirements for the banks was largely due to the fact that they managed to restore their capital and liquidity positions (higher capital adequacy ratio as a result of higher equity) rather than the lowering of a regulatory requirement. It was also demonstrated that (in principle) even when requirements for individual institutions are lowered (i.e., macroprudential policy is relaxed from the micro perspective), the overall policy in the country may, paradoxically, become more restrictive as it was the case in Portugal.
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