EBA updates list of correlated currencies for banks
The European Banking Authority (EBA) has updated its list of closely correlated currencies, which is used for prudential requirements for credit institutions. This update ensures the list reflects actual correlations based on data up to March 31, 2025.
Maintaining prudential accuracy
The European Commission has adopted an Implementing Regulation, based on draft technical standards submitted by the European Banking Authority (EBA), to amend Implementing Regulation (EU) 2015/2197. This update specifically concerns the list of closely correlated currencies, a critical component for credit institutions in calculating prudential requirements under Regulation (EU) No 575/2013.
The revision ensures that the currency pairs accurately reflect their actual correlation, thereby maintaining the integrity of risk assessments.
For this purpose, the EBA utilized data series ending on March 31, 2025, to compute the necessary three and five-year correlation assessments.
This continuous adjustment mechanism is vital for banks to accurately manage their market risk exposures and comply with capital adequacy rules, reflecting the dynamic nature of global financial markets and currency relationships.
Streamlined update process
The EBA's amendment process for these technical standards involved applying an established methodology to updated data, rather than introducing significant substantive changes.
This meant that an open public consultation or a detailed cost-benefit analysis was deemed disproportionate to the scope and impact of the draft standards.
Such an approach aligns with Article 15(1) of Regulation (EU) No 1093/2010 for minor changes.
The EBA did, however, seek advice from the Banking Stakeholder Group, ensuring industry perspectives were considered.
This pragmatic regulatory stance balances the need for continuous updates with administrative burden.
Efficiency meets market reality
While seemingly a technical adjustment, this update underscores the continuous, data-driven effort required to maintain robust prudential standards.
The EBA's decision to forgo public consultation for these minor changes reflects a pragmatic approach to regulatory efficiency.
It ultimately reinforces the principle that frameworks must adapt swiftly to market realities, even if the changes are incremental.
Source: The EBA updates list of correlated currencies
IN: