16.12.2014 Official Journal of the European Union L 359/155 COMMISSION IMPLEMENTING DECISION of 12 December 2014 on the equivalence of the supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures according to Regulation (EU) No 575/2013 of the European Parliament and of the Council (Text with EEA relevance) (2014/908/EU) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to 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 ('), and in particular Articles 107(4), 114(7), 115(4), 116(5) and 142(2) thereof, Whereas: (1)  Institutions are to fulfil capital requirements which adequately reflect the risks undertaken by those institutions, including credit risk, having regard to the different geographical contexts in which they operate. The credit risk incurred by institutions attached to exposures to entities located outside the Union is determined, all other factors being equal, by the quality of the relevant regulatory framework and supervision implemented in the relevant third country. (2)  Article 107(3) of Regulation (EU) No 575/2013 allows institutions to treat exposures to third country investment firms, credit institutions and exchanges as exposures to institutions only if the third country applies prudential and supervisory requirements to the entity concerned which are at least equivalent to those applied in the Union. (3)  Articles 114(7), 115(4) and 116(5) of Regulation (EU) No 575/2013 set specific risk weights applicable to expo- sures to central governments, central banks, regional governments, local authorities, and public sector entities located in third countries that apply supervisory and regulatory arrangements at least equivalent to those applied in the Union. (4)  Article 153 of Regulation (EU) No 575/2013 lays down the formula for the calculation of the risk weighted exposures amounts for exposures to corporates, institutions, central governments and central banks under the internal-ratings based (IRB) approach and details the parameters to be used for the calculation, including the coef- ficient of correlation. Article 153(2) of Regulation (EU) No 575/2013 sets the coefficient of correlation applicable to large financial sector entities. According to Article 142(1)(4)(b) of that Regulation, in order to qualify for the definition of large financial sector entity’, the financial sector entity or one of its subsidiaries must be subject to the laws of a third country applying prudential supervisory requirements at least equivalent to those applied in the Union. (5)  In order to determine the appropriate risk-weighted exposures for the calculation of capital requirements for the credit risk attached to exposures to certain categories of entities located in third countries, the Commission has assessed the equivalence of the supervisory and regulatory arrangements of third countries to the corresponding supervisory and regulatory arrangements in the Union. (6)  The equivalence has been determined by an outcome-based analysis of the third country’s regulatory and supervi- sory arrangements which tests their ability to achieve the same general objectives as the Union’s supervisory and regulatory arrangements. The objectives refer, in particular, to the stability and integrity of both the domestic and the global financial system in its entirety; the effectiveness and adequacy of protection of depositors and other consumers of financial services; the cooperation between different actors of the financial system, including regula- tors and supervisors; the independence and the effectiveness of supervision; and the effective implementation and enforcement of relevant internationally agreed standards. In order to achieve the same general objectives of the Union’s supervisory and regulatory arrangements, the supervisory and regulatory arrangements of the third () OJL176,27.6.2013,p. 1.