On April 28, the European Commission (the Commission) published an interpretative communication on the application of the accounting and prudential frameworks to facilitate European Union (EU) bank lending, support the EU economy and help mitigate the impact of the COVID-19 pandemic (the Communication).

In the Communication, the Commission encourages EU banks and EU financial regulators to make use of the flexibility available in the EU’s accounting and prudential rules to support the EU economy in light of COVID-19. For example, EU banks are encouraged to implement the International Financial Reporting Standard 9 transitional arrangements that should have a beneficial impact on their regulatory capital provisioning.

The Communication highlights the role and responsibility of the banking sector in limiting the economic impact of the COVID-19 pandemic and promoting a rapid recovery.

The Communication is available here.