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ECB open to giving banks more time to rebuild capital buffers

ECB bank supervisor Andrea Enria said that the European Central Bank is open to giving banks in the euro zone more time to rebuild capital buffers if the current crisis leads to a material deterioration of asset quality.

In an online conference Enria told that they plan to stick to the flexibility that they provide banks, to use the capital buffers until at least 2022. But they can also reconsider the time path if there were to be a significant materialization of asset quality problems.

Enria added that they don’t want to start tightening again the capital buffers while the crisis is still impacting on the bank’s balance sheets. The ECB last year allowed banks to dip into their buffers. This allowance is given so they could continue to lend to the real economy. They could also operate with lower buffers until the end of 2022, because of this.

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