New global standards on bank capital (Basel III) enter into force
The Capital Requirements Directive (CRD IV) package of legislation entered into force on 17 July. The package transposes – via a Regulation and a Directive – the new global standards on bank capital (the Basel III agreement) into EU law. The new rules, which will apply from 1 January 2014, tackle some of the vulnerabilities shown by financial institutions during the crisis, such as the insufficient levels of capital, both in quantity and in quality that resulted in the need for unprecedented support from national authorities.
The new framework sets stronger prudential requirements for banks, requiring them to maintain sufficient capital reserves and liquidity. It will make EU banks more resilient by strengthening their capacity to manage the risks linked to their activities will better equip them to absorb any losses they may incur in doing business.
More information is available at: