Reciprocation of Macro-prudential Measures

Reciprocity aims to increase the effectiveness of macro-prudential measures by reducing cross-border leakages and by minimising negative cross-border effects. Given the highly integrated nature of the EU financial sector, reciprocity is an essential element of the macro-prudential framework.

When a country introduces a national macro-prudential policy measure which may have cross-border effects, reciprocity requires other countries to apply an equivalent measure to domestically-authorised institutions in order to minimise regulatory leakage and cross-border effects. Currently, all EU Member State or relevant non-Member State requests for reciprocation are sent to the ESRB, which assesses the requests and issues subsequent recommendations to relevant authorities regarding reciprocity for particular measures.

In the case of each recommendation, the ESRB stipulates specific conditions which must be met by a Member State if a decision to not reciprocate a measure is to be deemed as “sufficiently explained”. The Central Bank undertakes an assessment of each recommendation for reciprocation by the ESRB. Where appropriate and relevant in the context of that assessment the Central Bank may comply with the recommendation to reciprocate the measures taken. Measures reciprocated by the Central Bank are outlined below.

The Central Bank has laid out a reciprocation framework (PDF) in line with the ESRB Recommendation (PDF) on the assessment of cross-border effects of, and voluntary reciprocity for, macro-prudential policy measures.

Reciprocity can be voluntary or mandatory. 

  • Voluntary reciprocity refers to measures recommended for reciprocation by the ESRB under recommendation ESRB/2015/2.
  • Mandatory reciprocation includes the application of the countercyclical capital buffer (CCyB) whereby, a rate of up to 2.5 per cent must be automatically reciprocated by Member States. Furthermore, Member States are required to apply the risk-weights and criteria introduced by competent authorities in another Member State (via Article 124 CRR) to exposures secured by mortgages on commercial and residential property located in that Member State. Likewise for the measures introduced under Article 164 CRR, institutions of a Member State shall apply the higher minimum loss given default values determined by competent authorities of another Member State to exposures secured by immovable property located in that Member State. 

List of voluntary measures reciprocated by the Central Bank following an ESRB recommendation under ESRB/2015/2

This list of measures refers only to voluntary reciprocity of measures by the Central Bank following an amendment to ESRB recommendation ESRB/2015/2. This list does not refer to measures which are subject to mandatory reciprocity under the CRD IV / CRR framework, including but not limited to Articles 124(5) and 164(7) of Regulation (EU) No 575/2013 which impose requirements directly on institutions.

France – tighter large exposure limit for highly-indebted large NFCs

See announcement of Central Bank decision regarding application of measure from 1 February 2022 as per ESRB Recommendation 2021/6, which supersedes the announcement of Central Bank decision regarding application of measures from 1 August 2019 as per ESRB Recommendation 2018/8 (PDF)

Decision by the Central Bank of Ireland to reciprocate a French measure under Article 458 | pdf 147 KB

List countercyclical buffer (CCyB) rates recognised by the Central Bank:

Rates in excess of 2.5 per cent set in another Member State

  • There are currently no Member State rates in excess of 2.5 per cent voluntarily recognised by the Central Bank.

Rates set in a third country where recognition follows a recommendation under ESRB/2015/1 (PDF).
This list of measures refers only to the discretionary recognition of CCyB rates by the Central Bank. This list does not include rates recognised under the framework of mandatory recognition of CCyB rates set by the designated authorities of other European Member States under the CRD IV / CRR legislative framework, including the European Union (Capital Requirements) Regulations 2014 (S.I. 158/2014).

  • There are currently no third country CCyB rates subject to voluntary recognition by the Central Bank.

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