Report of the Advisory Scientific Committee on non-performing loans

1 October 2018

The Advisory Scientific Committee (ASC) of the ESRB has today published a report discussing the conceptual foundations for a macroprudential approach to non-performing loans (NPLs).

The report links the various forms of market failures and imperfections identified with a wide range of available policies, argues for the need to establish intermediate objectives in this field, and discusses trade-offs in the design of preventive and corrective policies. Given its conceptual nature, the report neither focuses specifically on any particular country’s experience, nor systematically reviews or assesses any of the policy measures already adopted, including the most recent, to deal with NPL problems in the EU.

With the report published today the ASC is contributing to the ESRB’s response to the mandate it was given by the Council of the European Union (EU Council) in July 2017. The EU Council’s conclusions on an "Action plan to tackle non-performing loans in Europe", as adopted, invited the ESRB to develop, by the end of 2018, “macro-prudential approaches to prevent the emergence of system-wide NPL problems, while taking due consideration of procyclical effects of measures addressing NPLs’ stocks and potential effects on financial stability”. The ESRB plans to respond to that request with a policy report by the end of 2018.

For media queries, please contact William Lelieveldt, tel.: +49 69 1344 7316.