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Article 2 - The relevant indicator set

Article 2

The relevant indicator set

1.   The following economic indicators shall be classified as relevant for exposures within a given type of exposures:

(a)

for all types of exposures:

(i)

gross domestic product (GDP);

(ii)

unemployment rate;

(iii)

externally provided aggregate default rates, where available;

(iv)

externally provided aggregate credit losses, where available;

(b)

in addition to the economic indicators listed in point (a):

(i)

for exposures to corporates or to retail small and medium-sized enterprises (SMEs): sector- or industry-specific indices;

(ii)

for residential property exposures to corporates or to retail obligors: house prices or house price indices;

(iii)

for commercial immovable property exposures to corporates or to SME retail obligors: commercial immovable property prices or commercial immovable property price indices, and commercial immovable property rental prices or commercial immovable property rental price indices;

(iv)

for retail exposures other than those falling within point (i), (ii) or (iii): total household debt and disposable personal income, in each case where available;

(v)

for specialised lending exposures:

in the case of immovable property: immovable property prices or immovable property price indices, immovable property rental prices, or immovable property rental price indices for residential, commercial or industrial property, as applicable,

in the case of project finance: prices for the underlying products supplied,

in the case of object finance: indices for the relevant type or types of collateral,

in the case of commodity finance: prices or price indices for the relevant type of commodity;

(vi)

for exposures to institutions: financial credit indices;

(c)

in addition to the economic indicators listed in points (a) and (b), any other economic indicators that are explanatory variables for, or indicators of, the economic cycle specific to exposures in the type of exposures under consideration.

2.   The economic indicators identified for exposures within a type of exposures in accordance with paragraph 1 shall reflect the geographical distribution and, where applicable, the sectoral distribution of the exposures within that type of exposures.

For that purpose, an economic indicator shall be included in the relevant indicator set as follows:

(a)

once for each jurisdiction or, where appropriate, once for each geographical area within a jurisdiction, covered by a material share of that type of exposures; and

(b)

once for each sector, where applicable, covered by a material share of that type of exposures.

However, where economic indicators to be included in accordance with the second subparagraph show strong co-movement across the different jurisdictions, or where appropriate, different geographical areas within a jurisdiction, or, where applicable, different sectors, a common economic indicator may instead be selected to reflect those jurisdictions, geographical areas or sectors overall.