The Commission is proposing amendments to the following pieces of legislation:
The Capital Requirements Regulation (CRR) and Directive (CRD) which were adopted in 2013 and which spell out prudential requirements for institutions and rules on governance and supervision of institutions, respectively; The Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR) which were adopted in 2014 and which spell out the rules on the recovery and resolution of failing institutions and establish the Single Resolution Mechanism, respectively.
The newly adopted measures implement international standards into EU law, while taking into account European specificities and avoiding undue impact on the financing of the real economy. In particular, the proposals include the following key elements:
- A binding 3% leverage ratio (LR) which will prevent institutions from excessively increasing lending when they do not have enough capital;
- A binding detailed net stable funding ratio (NSFR) which will require credit institutions and systemic investment firms to finance their long-term activities (assets and off-balance sheet items) with stable sources of funding (liabilities). This will increase banks' resilience to funding constraints;
- A requirement to have more risk-sensitive own funds (i.e. capital requirements) for institutions that trade in securities and derivatives, following Basel's work on the ‘fundamental review of the trading book' (FRTB);
- The implementation of new standards on the total loss-absorbing capacity (TLAC) of global systemically important institutions (G-SIIs), which will strengthen the EU's ability to resolve failing G-SIIs while minimising risks for taxpayers;
- Making EU rules more proportionate and to ease burden for smaller and non-complex banks without compromising their stability;
- Making it easier for banks to lend to SMEs and fund infrastructure projects and thereby to support investments.
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26th October 2020
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