On 31 July 2018, the Financial Markets Law Committee (FMLC) published a letter addressing legal uncertainties in the proposal to amend moratorium powers within the Bank Recovery and Resolution Directive (BRRD).

The letter, dated 30 July 2018, notes the European Parliament’s Plenary Sitting of 25 June 2018, in which new proposals were offered to clarify the amendments to the BRRD. Namely, the insertion of a new Article 33a, which provides for a suspension to payment obligations both to avoid further deterioration in the financial conditions of the institution and to enable the resolution authority to determine the most appropriate resolution action. A new Article 33a(2) addresses the duration of suspension to payment obligations.

The FMLC appreciates the proposed clarification on the identified uncertainties but argues that the proposals continue to be discordant with internationally agreed standards identified by the Financial Stability Board, which recommends limiting stays to 48 hours but also adds that moratorium powers should only be available during resolution. The FMLC also states that the new Article 33a(6) does not take into account the impact of the ten-day window between the two-day pre-resolution moratorium and the two-day resolution stay (under Article 69).