- Question ID
-
2015_2001
- Legal act
- Regulation (EU) No 575/2013 (CRR)
- Topic
- Credit risk
- Article
-
134
- Paragraph
-
3
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
-
n.a.
- Name of institution / submitter
-
ECB
- Country of incorporation / residence
-
Germany
- Type of submitter
-
Competent authority
- Subject matter
-
Credit risk - standardised approach
- Question
-
Can cash equivalents be assigned a Risk weight of 0%? What is the definition of an equivalent cash item?
- Background on the question
-
Question raised to ECB Methodology and Standards Development Division.
- Submission date
- Final publishing date
-
- Final answer
-
The term "equivalent" in Article 134 (3) of Regulation (EU) No 575/2013 (CRR) does not refer to alternatives to "cash items" but to alternatives to "cash in hand".
Cash in hand, as defined by Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions, Annex V, Part 2, Point 1 (Instructions on Balance Sheet, Assets), includes holdings of national and foreign banknotes and coins in circulation that are commonly used to make payments.
The 0% risk weight is solely applicable to cash items but not to "cash equivalents". The applicability of the 0% risk weight is, however, not limited to cash in hand but extends to other forms of cash items different from deposits, on the balance sheet of the institution under the applicable accounting framework.
Balances in local currency held on current accounts of the respective central bank should be treated according to Article 114.
Please also see Q&A 180.
- Status
-
Final Q&A
- Answer prepared by
-
Answer prepared by the EBA.
- Note to Q&A
-
Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.
Disclaimer
The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.