List of legislative acts BRRd : d irective 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council d irective 82/891/EEC, and d irectives 2001/24/EC, 2002/47/EC, 2004/25/ EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No. 1093/2010 and (EU) No. 648/2012, of the European Parliament and of the Council CRd IV : d irective 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending d irective 2002/87/EC and repealing d irectives 2006/48/EC and 2006/49/EC CRR : Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012 Solvency II : d irective 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance Omnibus II d irective : d irective 2014/51/EU of the European Parliament and of the Council of 16 April 2014 amending d irectives 2003/71/EC and 2009/138/EC and Regulations (EC) No. 1060/2009, (EU) No. 1094/2010 and (EU) No. 1095/2010 in respect of the powers of the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority) Banking Law : Law of 25 April 2014 on the legal status and supervision of credit institutions. Organic Law : Law of 22 February 1998 establishing the Organic Statute of the National Bank of Belgium EMIR Regulation : Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories SSM Regulation : Regulation (EU) No. 1024/2013 of the Council of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions SRM Regulation : Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit NBB Report 2014 List of legislative ACTS 315
316 List of legislative ACTS NBB Report 2014 institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No. 1093/2010
List of boxes, tables and charts Boxes I. ECONOMIC AND FINANCIAL DEVELOPMENTS 1. Global economy and euro area 1.1 Global economy Box 1 : The secular stagnation concept 50 1.2 The economy in the euro area and its Member States Box 2 : Structural reforms in the euro area 58 1.3 Monetary policy of the Eurosystem Box 3 : Why is persistently low inflation a problem? 61 Box 4 : Impact of the balance sheet measures adopted between 2008 and 2013 and the role of banking sector capitalisation 72 2. Economic developments in Belgium 2.2 Labour market Box 5 : The development of the service voucher scheme 84 2.4 d emand and income Box 6 : Business investment slowly recovers 98 3. Financial developments in Belgium 3.1 Overall financial position of the Belgian economy Box 7 : Impact of ESA 2010 on Belgium s financial accounts 109 3.2 Households Box 8 : Valuing Belgium s residential property market 113 Box 9 : Household debt sustainability : effect of income shocks on the repayment capacity of Belgian households 119 NBB Report 2014 List of boxes, tables ANd charts 317
4. Public finances 4.1 Overview of fiscal policy Box 10 : European fiscal rules for Belgium 142 4.2 General government revenue, expenditure and overall balance Box 11 : Fiscal and parafiscal levies on labour and tax shift options 147 Box 12 : Lower interest rates and their effect on government interest charges 155 5. Placing the economy on a broader footing 5.3 Towards a more dynamic and flexible economy Box 13 : Regulating service activities at European level 180 II. PRUDENTIAL REGULATION AND SUPERVISION A. FURTHER DEVELOPMENT OF THE NEW SUPERVISION FRAMEWORK 1. Banks : progress with the banking union and implementation of Basel III and the Banking Law 1.3 Comprehensive assessment Box 1 : Qualitative recommendations resulting from the AQR 200 1.4 Bank resolution : towards a single resolution mechanism Box 2 : Financing of the single resolution fund 204 4. Macroprudential policy 4.3 Implementation of macroprudential policy in Belgium Box 3 : Analysis of macroprudential risks 226 B. PRUDENTIAL SUPERVISION 2. Banks, investment firms and payment institutions 2.2 Operational supervision Box 4 : Harmonisation of reporting requirements for banks 246 3. Insurance companies 3.2 Operational supervision Box 5 : External actuarial experts 254 318 List of boxes, tables ANd charts NBB Report 2014
Tables I. ECONOMIC AND FINANCIAL DEVELOPMENTS 1. Global economy and euro area 1.1 Global economy 1 Gd P of the main economies 46 1.2 The economy in the euro area and its Member States 2 Overview of the main macroeconomic variables in the euro area 54 3 General government budget balance and debt in the euro area 57 2. Economic developments in Belgium 2.2 Labour market 4 Labour supply and demand 82 2.3 Inflation and labour costs 5 Harmonised index of consumer prices and labour costs 86 6 Labour costs 91 2.4 d emand and income 7 Gd P and main expenditure categories 94 8 d eterminants of household gross disposable income, at current prices 95 9 d eterminants of the gross operating surplus of companies, at current prices 97 10 Balance of payments and net lending to the rest of the world 101 3. Financial developments in Belgium 3.1 Overall financial position of the Belgian economy 11 Financial assets and liabilities by sector 107 3.2 Households 12 Household assets and liabilities 112 3.3 Non financial corporations 13 Financial assets and liabilities of non financial corporations 122 3.4 Financial institutions 14 Income statement of Belgian credit institutions 132 15 Breakdown of Tier 1 capital and risk weighted assets 136 4. Public finances 4.1 Overview of fiscal policy 16 General government accounts 139 17 International comparison of overall balance and public debt 141 18 Targets for the overall balance of Belgian general government 141 4.2 General government revenue, expenditure and overall balance 19 General government revenue 146 20 Main fiscal and parafiscal measures 150 NBB Report 2014 List of boxes, tables ANd charts 319
21 General government primary expenditure 151 22 Adjusted primary expenditure by general government sub sector 152 23 Overall balance of general government and by sub sector 157 4.3 Public debt and government guarantees 24 Financing requirements and resources of the federal government 159 5. Placing the economy on a broader footing 5.1 Major challenges 25 Employment trends by main branch of activity 165 5.2 Boosting job creation in the market sector 26 Expenditure on active labour market policies in 2012 171 II. PRUDENTIAL REGULATION AND SUPERVISION A. FURTHER DEVELOPMENT OF THE NEW SUPERVISION FRAMEWORK 1. Banks : progress with the banking union and implementation of Basel III and the Banking Law 1.2 Comprehensive assessment 1 Change in the CET 1 ratio in the baseline scenario and the adverse scenario 201 1.4 Continued implementation of Basel III and the Banking Law 2 Comparison of Belgian and European structural reforms 211 2. Insurance : preparation for the transition to Solvency II 2.1 International developments : amendments to Solvency II by Omnibus II 3 Level 2 rules 218 B. PRUDENTIAL SUPERVISION 2. Banks, investment firms and payment institutions 2.2 Operational supervision 4 Number of institutions subject to the Bank s supervision 244 3. Insurance companies 3.2 Operational supervision 5 Number of undertakings subject to supervision 251 6 Colleges for insurance undertakings subject to the Bank s supervision 251 4. Oversight and financial market infrastructures 4.2 Organisation of supervision and oversight 7 Supervision and oversight, by the Bank, of financial market infrastructures 258 320 List of boxes, tables ANd charts NBB Report 2014
Charts I. ECONOMIC AND FINANCIAL DEVELOPMENTS 1. Global economy and euro area 1.1 Global economy 1 International financial market developments 42 2 Exchange rates 43 3 Commodity prices 44 4 International trade 45 5 Labour market indicators in the main economies 47 6 Overnight money market interest rate expectations and assets on the balance sheet of the main central banks 48 7 Inflation in the main economies 49 1.2 The economy in the euro area and its Member States 8 Quarterly profile of Gd P and the main expenditure categories in the euro area 52 9 Gd P in a selection of euro area countries 53 10 Inflation in the euro area 53 11 Investment in the euro area 54 12 Labour market in the euro area 55 13 Balance of payments current account balance 56 14 Consolidated debt of the non financial private sector in the euro area 56 1.3 Monetary policy of the Eurosystem 15 Inflation and inflation expectations in the euro area 61 16 Eurosystem s bank lending survey for the euro area 64 17 Bank financing of non financial corporations in the euro area 65 18 Counterparts of M3 65 19 Interest rates, money market rates and liquidity surplus in the euro area 66 20 Liquidity in the Eurosystem 68 21 Implicit expectations regarding the overnight interest rate in the euro area 69 22 Real interest rate in the euro area 70 23 Euro exchange rate 70 2. Economic developments in Belgium 2.1 Economic situation 24 Gd P in Belgium and confidence indicators 78 25 Value added of the main branches of activity 79 26 Business survey indicators for the main branches of activity 80 2.2 Labour market 27 Employment, working time and productivity 81 28 Temporary agency work and temporary lay offs 81 29 Harmonised unemployment rate in Belgium and the euro area 83 30 Unemployed job seekers in Belgium 83 2.3 Inflation and labour costs 31 Inflation in Belgium and in the three main neighbouring countries 87 32 Underlying inflation and costs 88 33 Consumer prices of food 89 NBB Report 2014 List of boxes, tables ANd charts 321
34 Gas and electricity consumer prices 90 35 Belgium s wage handicap in terms of hourly labour costs in the private sector, according to the CEC 91 36 Unit labour costs in the business sector in Belgium 92 2.4 d emand and income 37 Private consumption indicators 94 38 Savings ratio and capital income 95 39 Business investment 96 40 Gross operating surplus and wage bill of companies 97 41 Financing balance of domestic sectors as a whole 100 42 Exports and imports of goods and services, by volume 100 43 Exports and imports of goods in value by product category 101 3. Financial developments in Belgium 3.1 Overall financial position of the Belgian economy 44 Net financial assets and financial balance 106 45 Gross debt ratio of the non financial sector 108 46 Mutual claims and liabilities between non financial corporations and (quasi ) financial corporations 108 3.2 Households 47 Formation of financial assets by households : breakdown by asset class 115 48 Mortgage lending 116 49 Mortgage loan costs 117 50 Non regularised defaults 118 51 d efaults on mortgage loans by year of granting 118 3.3 Non financial corporations 52 Cash and deposits held by non financial corporations 123 53 Selection of new financial liabilities of non financial corporations 123 54 External funding costs of non financial corporations 124 55 Lending conditions and determinants according to credit institutions 125 56 Lending by resident banks to resident non financial corporations 126 57 Loan demand and determinants according to credit institutions 126 3.4 Financial institutions 58 Return on equity 127 59 Insurance companies : premium income and combined ratio 128 60 Guaranteed rates of return and breakdown of life insurance companies inventory returns 129 61 Belgian banks net interest income and yield spreads 130 62 Belgian banks customer deposits : outstanding amounts plus applied interest rates 131 63 Loans and debt securities held by credit institutions and insurance companies covering assets 133 64 Belgian banks balance sheet and cost/income ratios 134 65 Unrealised gains/losses and solvency margin of Belgian insurance companies 135 66 Own funds, required margin and regulatory solvency margin of Belgian insurance companies 135 322 List of boxes, tables ANd charts NBB Report 2014
4. Public finances 4.1 Overview of fiscal policy 67 d eterminants of the change in the government s structural overall balance 140 68 Size and breakdown of fiscal consolidation 140 4.2 General government revenue, expenditure and overall balance 69 Corporation tax 150 70 Primary expenditure of general government and Gd P 152 71 Public expenditure on health care, pensions and sickness and disability benefits 153 72 Primary expenditure by category and by entity 153 73 Ten year government bond yields and breakdown of changes in interest charges 154 4.3 Public debt and government guarantees 74 Consolidated gross government debt in Belgium and in the euro area 157 75 d eterminants of the change in the consolidated gross debt of general government 158 76 d irect impact of the sovereign debt crisis on Belgian public debt 158 77 Guarantees granted to financial institutions 159 5. Placing the economy on a broader footing 5.1. Major challenges 78 Budgetary costs of ageing 164 79 International employment comparison 164 80 Employment and value added in the main branches of activity 165 81 Public finance and trade balance challenges 166 82 Total factor productivity (TFP) 167 5.2 Boosting job creation in the market sector 83 Employment protection legislation 168 84 Hourly labour costs in the business sector in 2013 169 85 Wages and employment of low skilled young people in EU15 in 2010 169 86 Wages by age 170 87 Financial incentive to accept a low paid job 171 88 Transition from unemployment to work 172 89 Breakdown of unemployment by duration and level of education 173 90 Access to lifelong learning 174 91 Unemployment in geographic perspective 175 5.3 Towards a more dynamic and flexible economy 92 Sources of internal and external TFP growth 176 93 Job creation and destruction in the 2006 2013 period 177 94 Business start ups 177 95 Administrative barriers 178 96 Innovation 179 97 Regulatory framework for services activities 181 98 Potential electricity supply depending on the unavailability of production plants 183 NBB Report 2014 List of boxes, tables ANd charts 323
II. PRUDENTIAL REGULATION AND SUPERVISION A. FURTHER DEVELOPMENT OF THE NEW SUPERVISION FRAMEWORK 1. Banks : progress with the banking union and implementation of Basel III and the Banking Law 1.1 The single supervisory mechanism 1 Organisation of the SSM supervision units at the ECB and implications for Belgian banks 195 1.2 Comprehensive assessment 2 Components of the asset quality review 198 3 Comparison of the macroeconomic scenarios for Belgium and the EU 199 4 Contribution of the various factors to the quantitative results of the AQR in Belgium and in the euro area 200 2. Insurance : preparation for the transition to Solvency II 2.3 EIOPA stress tests 5 SCR ratios situation before the stress test 221 6 SCR ratios situation after the stress test 222 B. PRUDENTIAL SUPERVISION 1. Overview of the priorities of the annual risk reviews in 2014 and 2015 1.1 Risk review 2014 7 Risk review 2014 238 1.2 Risk review 2015 8 Risk review 2015 239 5. Cyber risks 9 Annual financial loss due to e banking fraud in Belgium 261 324 List of boxes, tables ANd charts NBB Report 2014
Tables in the statistical annexes 1 Main macroeconomic indicators in the euro area and other major economies (1 2) 265 2 Main macroeconomic indicators in the euro area and other major economies (2 2) 266 3 Gd P and main categories of expenditure, by volume 267 4 Gd P and main categories of expenditure, by volume 268 5 d eflators of Gd P and the main categories of expenditure 269 6 Gd P and the main categories of expenditure, at current prices 270 7 Gd P and the main categories of expenditure, at current prices 271 8 Value added of the various branches of activity, by volume 272 9 Labour market 273 10 Employment rate 274 11 Unemployment rate 275 12 Inactivity rate 276 13 Employment rate : Regional details 277 14 Unemployment rate : Regional details 278 15 Inactivity rate : Regional details 279 16 Harmonised index of consumer prices 280 17 Summary account of households, at current prices 281 18 Summary account of corporations, at current prices 282 19 Summary account of the rest of the world, at current prices 283 20 Revenue, expenditure and overall balance of general government 284 21 Overall balance of general government, by sub sector 285 22 Consolidated gross debt of general government 286 23 d eterminants of the change in the consolidated gross debt of general government 287 24 Current and capital transactions according to the balance of payments 288 25 Formation of financial assets and new financial liabilities of households 289 26 Formation of financial assets and new financial liabilities of non financial corporations 290 27 Formation of financial assets and new financial liabilities of monetary financial institutions 291 28 Formation of assets and new liabilities of financial intermediaries other than monetary institutions 292 29 Overview of institutions subject to National Bank of Belgium supervision 293 30 Balance sheet structure of credit institutions governed by Belgian law, by product 294 31 Main components of the income statement of credit institutions governed by Belgian law 295 32 Key figures from credit institutions governed by Belgian law 296 33 Main components of insurance companies balance sheet 297 34 Main components of insurance companies income statement 298 35 Level and composition of insurance companies solvency margin 299 36 Net issues of securities by financial and non financial corporations and general government 300 37 Interest rates 301 NBB Report 2014 List of boxes, tables ANd charts 325