Global Regulator & Central Bank News Roundup

Volume 03/2024 (January 15 – January 21)

 

Your weekly summary of key regulatory updates in an objective bite-size format, drawing on official news and press releases from 700+ financial services regulators, central banks as well as global and regional standard setters. For more current updates, visit Regxplora, Regxelerator’s end-to-end automated and generative AI-powered financial regulatory intelligence platform. Sign up here to receive the roundup via email.
 


Themes covered in this edition
 

 


Prudential & financial stability
 
BCBS, CPMI, and IOSCO Issue Consultative Reports on Initial Margin Transparency in Central Clearing and Margin Practices in Non-Centrally Cleared Markets
The Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), and the International Organization of Securities Commissions (IOSCO) have jointly released a consultative report titled “Transparency and responsiveness of initial margin in centrally cleared markets – review and policy proposals.” The report outlines ten policy proposals designed to enhance the resilience of the centrally cleared ecosystem by improving the understanding of central counterparties’ (CCPs) initial margin calculations and potential future margin requirements among participants. Key proposals include the provision of margin simulation tools by CCPs with minimum functionality for clearing members and their clients, additional disclosures by CCPs regarding their margin models and anti-procyclicality tools, a standardized metric for measuring initial margin responsiveness, as well as enhanced analytical and governance frameworks for margin models, including when CCPs override model margin requirements. Clearing members are also encouraged to offer greater transparency to their clients and CCPs, and to develop frameworks for assessing margin responsiveness. The report follows the 2022 BCBS-CPMI-IOSCO Review of margining practices.

Further to this report, the BCBS and IOSCO have jointly published a separate consultation report with focus on margin practices in non-centrally cleared markets. The report offers eight recommendations aimed at aimed at enhancing market functioning by streamlining variation margin (VM) processes and increasing the responsiveness of initial margin (IM) models to market shocks. The first set of recommendations focus on overcoming obstacles that may disrupt the smooth exchange of VM in stressful conditions, while the second set of recommendations emphasizes best practices for ensuring that IM calculations remain robust during volatile market periods. The report builds on a previous review of margining practices published in September 2022 and invites industry feedback. Report to the reports can be provided until April 16 and 17, respectively.

 

FSB Report Highlights Italy’s Effective Reduction of Banking Sector NPLs
The Financial Stability Board (FSB) has released a peer review report detailing Italy’s efforts in reducing non-performing loans (NPLs) within its banking sector, achieving a reduction from €360 billion in December 2015 to €63 billion by June 2023. The report acknowledges the effectiveness of measures such as accounting and regulatory changes, the development of a secondary NPL market through a government guarantee scheme for securitization of bad loans, and the overhaul of restructuring and enforcement procedures. While commending these efforts, the FSB suggests further actions to maintain a robust secondary market for NPL disposal and to enhance the efficiency of insolvency, debt restructuring, and enforcement frameworks. The peer review, led by Makoto Minegishi from the Bank of Japan, involved dialogue with Italian authorities and market participants, and was discussed within the FSB’s Standing Committee on Standards Implementation (SCSI), chaired by Ryozo Himino. The FSB emphasizes the Italian experience as a reference for other jurisdictions facing similar challenges and continues its commitment to periodic peer reviews among member jurisdictions to uphold international financial standards.

 

EBA Proposes Revisions to 2025 Benchmarking Exercise Data Collection for Credit and Market Risk Models
The European Banking Authority (EBA) has initiated a consultation on proposed amendments to the Implementing Regulation on the benchmarking of credit risk, market risk, and IFRS9 models for the 2025 exercise. The consultation paper introduces significant updates, particularly in the market risk framework, with the introduction of new templates for the collection of internal model approach (IMA) risk measures under the fundamental review of the trading book (FRTB). These measures include expected shortfall, default risk charge, and stress scenario risk measure. Additionally, the EBA suggests modifications to the market portfolio and an expansion of the validation portfolios for the Alternative Standardised Approach. For credit risk, the amendments are minor and aim to clarify the reporting requirements for the probability of default and loss given default risk parameters, as well as the use of internal model IDs with Competent Authorities. Stakeholders are invited to submit feedback by 27 March 2024. A public hearing is scheduled for 28 February 2024.

 

U.S. Senate Banking Committee Remains Divided Over Basel III Endgame Proposal
As the comment period on the jointly proposed rules to strengthen large bank capital requirements by the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) has come to a close, members of the U.S. Senate Committee on Banking, Housing and Urban Affairs have continued to express divergent positions.The agencies’ proposed rules, which were announced in mid-2023, seek to increase capital requirements by 19% for U.S. Global Systemically Important Banks and by 6% for other large banks with assets over $100 billion, affecting fewer than 50 banks in the United States. Chairman of the Committee, U.S. Senator Sherrod Brown, along with a group of fellow Senators, has reiterated strong support for the implementation of new capital requirements in a dedicated letter to the heads of the three agencies. The group emphasized the critical role of capital as a buffer during economic downturns, enabling banks to continue lending and support their communities. Meanwhile, the Committee’s’ Republican members, led by Ranking Member Tim Scott, have reiterated their stance against the proposal. In a separate letter to the agencies, the members criticized the lack of comprehensive economic analysis and the potential adverse effects on credit access and financial services, particularly for low-income and minority communities. The letter references previous communications and hearings, including testimonies from CEOs of major banks, which underscored the proposal’s potential to constrain economic growth and lending. In addition to the Senate Committee’s Republican members, several international organization also expressed potential concerns. ISDA, in collaboration with the Securities Industry and Financial Markets Association (SIFMA), has submitted a detailed response, highlighting concerns that the proposed increases in capital requirements for bank trading activities are disproportionate to the actual underlying risks and could detrimentally affect the liquidity and efficiency of US capital markets. The response referenced findings from a quantitative impact study, involving eight US global systemically important banks, which projects a 129% surge in market risk and credit valuation adjustment risk-weighted assets under the new expanded risk-based approach compared to the current standardized approach. Likewise, the Institute of International Bankers (IIB) raised concerns over the fairness and adherence to the principle of “national treatment” for the U.S. operations of international banks, stressings the potential disproportionate impact of the Basel III Endgame proposal on certain internationally headquartered banks.

 


AML & CFT
 
EU Council and Parliament Reach Provisional Accord on Enhanced Anti-Money Laundering Measures
The European Council has announced a provisional agreement between the Council and Parliament on parts of the anti-money laundering (AML) package, aimed at protecting EU citizens and the financial system from money laundering and terrorist financing. Under the package, rules applicable to the private sector will be consolidated into a dedicated new regulation and will complement a directive, which will address organization of institutional AML/CFT systems at national level in the member states.

The new AML regulation expands the list of obliged entities, which includes financial institutions, banks, real estate agencies, asset management services, casinos, merchants, and now, most notably, the crypto sector. Crypto-asset service providers (CASPs) will be required to conduct due diligence on their customers for transactions of €1000 or more. This also extends to traders of luxury goods and professional football clubs and agents, with the latter subject to a longer transition period of 5 years. Enhanced due diligence measures are introduced for cross-border correspondent relationships, especially concerning crypto-asset service providers and transactions involving high net-worth individuals. Furthermore, an EU-wide limit of €10,000 is set for cash payments, with member states having the discretion to impose lower limits.

The directive aspect of the agreement focuses on beneficial ownership, aiming for more harmonized and transparent rules. It establishes a 25% threshold for beneficial ownership, addressing ownership and control components to identify all beneficial owners, including non-EU entities operating in the EU. This includes retroactive registration of foreign entities owning real estate since January 1, 2014. Moreover, the directive enhances the responsibilities of Financial Intelligence Units (FIUs), granting them immediate access to various types of information and enabling closer cooperation in cross-border cases. The agreement also underscores the role of supervisors in ensuring effective oversight of obliged entities and introduces new supervisory measures for the non-financial sector. The next steps involve finalizing the texts for approval by the Committee of Permanent Representatives and the European Parliament, with formal adoption to follow before publication in the EU’s Official Journal.

 

EBA Expands AML/CFT Guidelines to Include Crypto-Asset Service Providers
The European Banking Authority (EBA) has published the final Guidelines amending its existing Guidelines on money laundering (ML) and terrorist financing (TF) risk factors to expand to crypto-asset service providers (CASPs). The amended Guidelines introduce a dedicated sectoral Guideline for CASPs, which sets out a non-exhaustive list of factors ML and TF related to the nature and behaviour of customers, characteristics of products, services and transactions, delivery channels as well as geographical locations, which may contribute to higher or lower risk exposure and which are intended to help CASPs in more accurately identifying their ML and TF vulnerabilities. Among other things, the Guidelines considers products that allow transfers to and from self-hosted addresses or other forms of decentralized trading platforms and protocols, products with anonymity features and/or transfers to and from platforms that obscure transactions and contribute to anonymity as higher risk. Additionally, the new Guideline sets forth expectations for enhanced and simplified customer due diligence (CDD), record keeping as well as requires CASPs to have effective tools in place such as for transaction monitoring and advanced analytics. Besides the new Guideline, several amendments are introduced to existing Guidelines including the general Guidelines on risk assessments, identifying risk factors, CDD measures and training as well as the several sectoral Guidelines to accommodate for circumstances when other financial instruments interact with CASPs. The amending Guidelines will apply from December 30, 2024.

 


Cyber & operational resilience
 
ESAs Issue Final Draft Technical Standards Under DORA
The European Supervisory Authorities have published the first set of final draft technical standards under the Digital Operational Resilience Act (DORA). The standards aim to bolster the digital operational resilience of the EU financial sector by enhancing and harmonizing the management of Information and Communication Technology (ICT) risks and third-party risks across different financial sectors. The draft includes Regulatory Technical Standards (RTS) on ICT risk management frameworks, criteria for classifying ICT-related incidents, and policies on ICT services provided by third-party service providers (TPPs). The latter two detail inter alia the approach and criteria for the classification of major ICT-related incidents including applicable materiality thresholds as well as set expectations for the governance arrangements, risk management internal control framework that financial entities should have in place regarding the use of ICT third-party service providers. Additionally, Implementing Technical Standards (ITS) have been established for the templates for the register of information to be maintained by financial entities for their contractual arrangements with ICT third-party service providers . The release of the final drafts follows the public consultation during Q2/3 2023, which received over 420 responses leading to specific changes for simplification, proportionality, and sector-specific concerns. The final draft technical standards have been submitted to the European Commission for review, with the aim of adopting the standards in the coming months.

 


Conduct & consumer protection
 
EIOPA Issues Second Biennial Assessment of Insurance Distribution Directive Implementation
The European Insurance and Occupational Pensions Authority (EIOPA) has released its second report on the implementation of the Insurance Distribution Directive (IDD), providing a comprehensive analysis of the insurance intermediaries market, cross-border activity patterns, the quality of advice and selling methods, and the adequacy of resources for competent authorities. The report highlights a continued decline in the number of registered intermediaries and notes improvements in advice and selling methods in some Member States due to corrective measures by national competent authorities (NCAs). However, it also identifies significant advice and selling method deficiencies in other states, as evidenced by mystery shopping activities, such as demands and needs of consumers not properly taken into account and failure to provide pre-contractual information. Challenges have also emerged regarding the application of new sustainability rules, with consumers struggling to understand disclosures and complex concepts, and insurance distributors facing difficulties in finding suitable training to provide appropriate advice. The report further points out issues with remuneration and conflicts of interest, leading several NCAs to implement measures such as commission caps or enhanced disclosure rules to mitigate the impact on consumers. Additionally, detrimental cross-selling practices, such as bundling mobile phone insurance with the purchase of a mobile phone, have been observed. The report includes a detailed country-by-country analysis and an interactive map summarizing these findings.

 

CFPB Seeks to Amend Overdraft Fee Regulations for Major Depository Institutions
The Consumer Financial Protection Bureau (CFPB) has proposed a new rule aimed at curbing excessive overdraft fees by closing a loophole that has historically exempted overdraft lending services from the Truth in Lending Act and other consumer financial protection laws. The proposal targets insured financial institutions with assets over $10 billion, which includes about 175 of the largest depository institutions in the United States. These institutions often charge a $35 fee for overdraft loans, despite the fact that most debit card overdrafts are under $26 and are typically repaid within three days. The CFPB’s proposed rule would require these large financial institutions to treat overdraft loans similarly to credit cards and other loans, providing clear disclosures and protections. The rule also suggests limiting the exemption to overdraft practices that are not primarily profit-driven and proposes fee benchmarks ranging from $3 to $14, seeking public comment on the appropriate amount. The initiative forms part of the CFPB’s broader efforts to eliminate junk fees and promote competition in the consumer financial product marketplace. In response to the CFPB’s announcement, the U.S. Financial Services Committee,under the leadership of Chairman Patrick McHenry and Subcommittee Chairman Andy Barr, released a statement, critizing the proposal. The lawmakers argue that the rule contradicts the CFPB’s consumer protection mission by imposing a one-size-fits-all approach to financial products and services, which they believe will reduce financial inclusion, limit consumer choice, hinder innovation, and increase banking costs for consumers. They contend that the rule will particularly impact access to short-term liquidity products, which are essential for many Americans to manage their finances.

 

Banco do Brasil and National Treasury Introduce Educa+ Mulher Program for Women’s Financial Education and Security
Banco do Brasil and the National Treasury have introduced the Educa+ Mulher initiative, a pioneering financial education and protection program specifically targeting women. This initiative encourages women to invest in the Treasury Educa+ fixed income security, a product designed to facilitate savings for educational purposes, inspired by Nobel Prize-winning economic theories. Women who invest over R$ 35 are automatically granted a complimentary BB Seguro de Vida Mais Mulher life insurance policy for one year, aimed at safeguarding the educational future of their beneficiaries in case of unforeseen circumstances. The program also provides free financial education content, including tips, courses, and both human and digital advice via WhatsApp. This initiative is part of a broader agenda to promote female inclusion and empowerment, with Banco do Brasil offering additional support through specialized credit programs for women entrepreneurs.

 


Fintech & ecosystem innovation
 
Industry Associations Seek Amendment to AI Act for Clear Distinction of Credit Scoring Techniques
The European Banking Federation (EBF), along with several other financial associations including in collaboration with several other financial associations including the Association of Consumer Credit Information Suppliers (ACCIS), the European Association of Co-operative Banks (EACB), the European Fintech Association (EFA), has published a joint statement clarifying the distinction between traditional credit scoring techniques and artificial intelligence (AI) in the context of the ongoing development of the Artificial Intelligence Act. This statement, which seeks to draw attention to the need for legal clarity in the Act’s definition of AI systems, emphasizes safeguarding current credit scoring operations from potential disruptions due to the pending technical details surrounding the definition of AI systems. The co-signatories argue that traditional credit scoring methods, such as logistic regression and decision trees, are rule-based and lack the dynamic learning capabilities of AI, operating within human-set parameters and offering transparency and explainability. As a result, they should not be labelled as AI if used in isolation. Specifically, the co-signatories recommend amendments to the AI Act, particularly Recital 6a of the European Parliament, to support a clearer distinction.

 

NY DFS Superintendent Issues Proposed Guidance on AI Usage to Mitigate Bias and Discrimination in Insurance Sector
The New York State Department of Financial Services (DFS) has issued a proposed circular letter for public comment, targeting the use of artificial intelligence (AI) in the insurance sector in New York State. This directive, detailed in the Proposed Insurance Circular Letter dated January 17, 2024, emphasizes the need for insurers to develop and manage their use of External Consumer Data and Information Sources (ECDIS) and Artificial Intelligence Systems (AIS) responsibly. It acknowledges the potential benefits of these technologies in streamlining underwriting and pricing processes, while also highlighting the risks associated with systemic biases, potential discrimination, and the variable accuracy of ECDIS, which may be further reinforced by the self-learning nature of AIS.

In the proposed circular letter, the DFS mandates that insurers utilizing these technologies establish robust governance and risk management frameworks to mitigate potential harm and ensure compliance with legal obligations. This includes adherence to fairness principles, ensuring data actuarial validity, and preventing unfair or unlawful discrimination. Insurers are required to demonstrate that ECDIS and AIS do not use, nor are based on, any class protected under the Insurance Law Article 26. They must also ensure that their use of these systems does not result in unfair discrimination or violate any regulations. Insurers are accountable for conducting comprehensive assessments to confirm that underwriting or pricing guidelines derived from ECDIS or AIS are not discriminatory. This involves a multi-faceted approach, including quantitative and qualitative assessments, to ensure compliance with anti-discrimination laws. Additionally, insurers are responsible for maintaining detailed documentation of their testing methodologies and analysis for unfair or unlawful discrimination, which must be made available to the DFS upon request. Regular testing and updates are required whenever significant changes are made to ECDIS or AIS. The Department also retains the authority to audit and examine an insurer’s use of these systems, emphasizing the importance of transparency and accountability in their application.

 

CSA Proposes Regulatory Framework Amendments for Crypto Asset Holdings by Public Investment Funds
The Canadian Securities Administrators (CSA) have introduced proposed amendments to National Instrument 81-102 Investment Funds (NI 81-102) and related changes to Companion Policy 81-102CP Investment Funds (81-102CP), focusing on investment funds dealing with crypto assets. These amendments are intended to provide clear regulatory guidance for Public Crypto Asset Funds, which invest directly or indirectly in crypto assets. The key aspects of these amendments include specifying types of permissible crypto assets, setting restrictions on crypto asset investments, and detailing custody requirements for these assets. The amendments aim to codify practices developed mainly through the prospectus review process and exemptive relief previously granted, offering clarity for investment fund managers on crypto asset investments. This clarity is expected to encourage new product development while ensuring risk mitigation measures are integrated into the investment fund regulatory framework. Significant proposed amendments include altering the definition of “alternative mutual fund” to encompass funds investing in crypto assets, due to their capacity for greater exposure to alternative asset classes. The amendments also propose investment restrictions, limiting direct crypto asset dealings to alternative mutual funds and non-redeemable investment funds, and specifying that these assets must be fungible and listed on a recognized exchange. There are also proposed prohibitions on using crypto assets in certain transactions like securities lending, repurchase transactions, and reverse repurchase transactions, as well as clarifications barring money market funds from holding crypto assets. Additionally, the amendments put forward specific custodianship provisions for crypto assets, including offline storage requirements, insurance coverage guidelines, and annual compliance reports assessing custodial controls. This initiative forms part of a broader project by the CSA to adapt NI 81-102 to the unique characteristics of crypto assets, ensuring adequate investor protection and risk mitigation. The project involves three phases: Phase 1, completed with the publication of CSA Staff Notice 81-336; Phase 2, the current proposed amendments; and Phase 3, a future public consultation on a comprehensive regulatory framework for funds investing in crypto assets. Feedback can be provided until April 17, 2024.

 


ESG
 
EBA Launches Public Consultation on Draft Guidelines for ESG Risk Management in Financial Institutions
The European Banking Authority (EBA) has initiated a public consultation on its draft Guidelines concerning the management of Environmental, Social and Governance (ESG) risks for financial institutions. Part of EBA’s sustainable finance roadmap, the proposed Guidelines are designed to establish a framework, including internal processes and arrangements, for the identification, measurement, management, and monitoring of ESG risks, including the financial risks associated with ESG factors and those emerging from the adjustment process towards the objective of achieving climate neutrality in the EU by 2050. Stakeholders are invited to submit comments on the consultation paper by 18 April 2024, with the option to participate in a virtual public hearing scheduled for 28 February 2024.

 

FCA Forms Expert Working Group to Bolster Sustainable Finance in Advisory Sector
The Financial Conduct Authority (FCA) has established a new working group to enhance sustainable finance capabilities within the financial advice sector, appointing Daniel Godfrey as chair and Julia Dreblow as vice-chair. The Personal Investment Management & Financial Advice Association (PIMFA) will act as the secretariat for this initiative. This move follows the FCA’s November announcement of measures aimed at maintaining the UK’s leading role in asset management and sustainable investment. The working group, with the FCA participating as an active observer, is tasked with reporting on the support needed for the advice sector to adopt good sustainability practices by the second half of 2024. The group’s membership will be selected by the chair and will represent a diverse range of industry participants, while also seeking input from external stakeholders, including consumers. The initiative is part of the FCA’s broader strategy to enhance trust and transparency in sustainable investment products, which includes the introduction of the Sustainability Disclosure Requirements, investment labels, and a consultation on an anti-greenwashing rule.

 


Other transversal themes
 
54th Annual WEF brings together over 60 heads of states to discuss critical geo-political, economic, technological and environmental challenges
The 54th Annual Meeting of the World Economic Forum in Davos, Switzerland, brought together over 60 heads of states and 300 ministers and political alongside key private sector stakeholders to address key global challenges and the complex interplay of geo-political, economic, technological, and environmental factors shaping the global landscape. A primary focus of the meeting was the ongoing geo-political tensions and conflicts impacting global peace and stability. Discussions highlighted the necessity for global unity and cooperation in addressing security crises, especially in the Middle East, and the overarching structural forces driving political fragmentation. The need for a cohesive approach to manage these tensions was underscored, with an emphasis on diplomacy and multilateral engagement. Economic governance and the future of the global economy were also central themes. With the world entering 2024 under economic uncertainties, deliberations centered on fostering growth while ensuring social equity and environmental protection. The forum touched upon the multilateral trading system and its influence on economic dynamics, with insights into potential shifts in monetary policy, including interest rate adjustments. The concept of transitioning from ‘easy money’ to ‘fair money’ was discussed, reflecting a shift in the global economic paradigm. Artificial Intelligence (AI) dominated technology discussions, acknowledged as a force capable of bringing significant change. The forum emphasized the dual need for advancing AI innovation and ensuring responsible governance and regulation. The potential impacts of AI on various sectors, including the labor market, healthcare, and governance, were explored, with an emphasis on reskilling and cybersecurity in the age of AI. Other critical discussion areas included energy systems and the imperative of sustainable transformation formed another critical area of discussion. The forum recognized the recent shocks to energy supplies and security, and the role of collaboration in responding to these challenges. Discussions revolved around building future energy systems, with a focus on photovoltaic capacity, transportation, and improving energy efficiency. The importance of an equitable and sustainable energy transition was highlighted, acknowledging the role of the private sector in driving these changes. Lastly, the discussions at the forum also highlighted the importance of including diverse voices in finding solutions to global challenges.

 


Leadership changes & appointments
 
Deutsche Bundesbank Executive Board Member Sabine Mauderer Named Chair of NGFS
Sabine Mauderer, serving on the Executive Board of the Deutsche Bundesbank, has been appointed as the Chair of the Network for Greening the Financial System (NGFS). Her role will involve steering the NGFS as it continues to integrate climate risk considerations into the framework of financial supervision and to promote best practices in environmental sustainability within the global financial industry. She succeeds Ravi Menon in the role. Additionally, Ms Fundi Tshazibana, Deputy Governor of the South African Reserve Bank and Chief Executive Officer of the Prudential Authority, has been named new NGFS Vice-Chair.

 


Cross-border cooperation
 
DIFC and Guernsey Finance Partner to Advance Sustainable Finance and Economic Expansion
The Dubai International Financial Centre (DIFC) has entered into a collaborative agreement with Guernsey Finance to promote sustainable finance innovation and economic growth within their respective International Financial Centres (IFCs). The new partnership aims to facilitate investment inflows, protect investors, and drive the development of the financial services industry through events and knowledge exchange.

 

Liechtenstein and Norway Intensify EEA Financial Regulatory Coordination
Liechtenstein and Norway have agreed to enhance their cooperation within the European Economic Area (EEA) on financial services regulation. Prime Minister Daniel Risch of Liechtenstein and Norwegian Finance Minister Trygve Slagsvold Vedum have decided to closely coordinate the adoption of over 100 new EU financial services regulations to ensure a level playing field for stakeholders in Liechtenstein. The agreement follows a summit of EEA/EFTA heads of government in October and aims to strengthen EEA cohesion, particularly in the financial services sector, which is of significant importance to Liechtenstein. Key regulatory areas discussed include new rules for crypto assets and green bonds, measures to combat money laundering and terrorist financing, and revisions to market infrastructure regulation and the European system of financial supervision.

 

CVM Partners with CAF to Advance Financial Literacy Among Indigenous Populations in Brazil
The Brazil Securities Commission (CVM) has entered into a technical cooperation agreement with CAF – Development Bank of Latin America and the Caribbean to develop a financial and digital literacy education methodology tailored for Brazil’s indigenous populations. The initiative aims to create inclusive and culturally sensitive educational materials. The project addresses the economic marginalization of indigenous entrepreneurs due to difficulties in accessing capital and aims to facilitate their integration into financial and capital markets in a non-predatory manner. The partnership includes the development of educational materials for indigenous schools, teacher training, digital literacy resources, and the monitoring of the project’s impact using quantitative and qualitative indicators.