The European Central Bank announced a temporary reduction in capital requirements for market risk for investment banks. In this way, the ECB will provide banks with temporary capital relief for their trading activities to help them withstand the coronavirus pandemic.

The ECB has stated that it is temporarily reducing the quality market risk multiplier, which is one of the banking supervisory measures used to offset banks’ possible undervaluation of their capital requirements for market risk.

The Central Bank reports that the measure aims to respond to the high levels of capital market volatility against a background of a coronavirus pandemic, aiming at maintaining banks’ ability to provide market liquidity and continue their market activities.

The ECB also indicated that its decision would be reviewed in six months

Deutsche Bank AG, BNP Paribas SA, and Societe Generale SA are among the banks that could maximize the benefit of this relief as they conduct the largest trading business in the euro area.

Days ago, the ECB provided unprecedented relief to the pressured financial industry of the old continent following the outbreak of the viral pandemic, reducing capital buffers so that banks could increase lending to European businesses.

According to the Bloomberg agency, the reason for today’s decision is information from last week that investment banks have pressured the ECB to allow them to remove some of the latest strong stock and bond volatility in calculating the market risks facing their trading operations.