Recital 6

(6)In its recommendation of 20 December 2012 on funding of credit institutions ⁸ , the European Systemic Risk Board (‘ESRB’) invited national competent authorities and the European Supervisory Authority (European Banking Authority) (‘EBA’), established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council ⁹ , to identify best practices regarding covered bonds and to encourage the harmonisation of national frameworks. It also recommended that EBA coordinate actions taken by national competent authorities, particularly in relation to the quality and segregation of cover pools, bankruptcy remoteness of covered bonds, the asset and liability risks affecting cover pools and disclosure of the composition of cover pools. The recommendation further called on EBA to monitor the functioning of the covered bond market by reference to best practices identified by EBA for a period of two years, in order to assess the need for legislative action and to report to the ESRB and to the Commission accordingly.