Directive 2006/48/EC and Directive 2006/49/EC contain a number of different options and discretions that partly may be used by the supervised institutions themselves and partly by the supervisory authority or national legislator respectively.
According to Article 144(b) of Directive 2006/48/EC competent authorities are required to disclose the manner of exercise of the options and discretions available in Community legislation.
As there is no generally accepted definition of what constitutes a "national discretion", the European banking Authority (EBA) (the former CEBS) laid down a consistent terminology for the sake of clarity when designing the supervisory disclosure framework:
- "Option" refers to a situation in which competent authorities or Member States are given a choice on how to comply with a given provision selecting from a range of alternatives set forth in Community legislation.
- "Discretion" or "national discretion" refers to a situation in which competent authorities or Member States are given a choice as to whether to apply or not to apply a given provision.
Finally, not all options or national discretions that might fall within the scope of the framework and meet the above definition are necessarily of interest for supervisory disclosure purposes. In particular, some options or discretions are exercised not by competent authorities or Member States, but by the institutions themselves. The Bank therefore does not make disclosures concerning discretions that it does not have the power to exercise.
In addition, Directive 2006/48/EC explicitly states the possibility to mutually recognise the exercise of certain national discretions in another Member State.