The EU Parliament, the European Council and the EU Commission are progressively converging on the legislations known as CRD6/CRR3, that will implement the final Basel 3 framework in the EU.
The challenge for the policy makers is to combine the positives of the international banking standards and a reasonable level of regulatory capital. In this end deviations from the international accord are being introduced. The level of application of the output flour and the length of the transition of arrangements remain open for discussion. However, the Chair of the EBA, as well as the Chair of the European Central Bank’s Single Supervisory Mechanism, for EU legislators to adhere closely to the timing and content of the BCBS Basel framework.
The timing of the implementation in the EU is a clear contribution to strike such a sensitive political balance, in a context where Japan has already implemented international standards, and other major financial services jurisdictions, including the UK and the US, said they target 1 January 2025 to implement them.
This legislative exercise is unfolding at the moment when recently bank defaults notably in the US exposed the case of too limited applications of international standards.
The session in this context will both address all the challenges posed to banks and supervisors by the regional or national implementation of the Basel accord and the conditions to fully rip the expected benefits of international prudential standards.
Points of discussion
- What are the main anticipated impacts of the EU Basel 3 implementation package in the EU? Should the EU adaptations on the table be considered as watering down the international standard? How to explain the EU specificities?
- Is the international framework risk sensitive? In the current macroeconomic and monetary context, is the international bank framework demonstrating sufficient agility?
- How to achieve a global standard which both improves supervisors mutual trust globally and accounts for local specificities?