26 Jun 2012

Implementing Basel III in Europe: Diagnosis and avenues for improvement

Rym Ayadi / Emrah Arbak / Willem Pieter De Groen

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This Policy Brief provides a preliminary diagnosis of the proposed regulatory reforms contained in the Capital Requirements Directive and Regulation (CRD IV-CRR), which translate into EU law the Basel III standards adopted by the Basel Committee for Banking Supervision, and suggests avenues for improvement. The main criticism is that the proposal is not ambitious enough. In some crucial areas, such as the leverage ratio and the long-term liquidity requirements adopted under the Basel III framework, the CRD IV-CRR proposal stops short of making a strict commitment to introduce binding requirements and instead is contented with weaker (and possibly divergent) disclosure requirements.

Rym Ayadi is a Senior Research Fellow and Head of the Financial Institutions unit at CEPS. Emrah Arbak is a Researcher and Willem Pieter De Groen is a Research Assistant at the Financial Institutions unit at CEPS.

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