PRA has published BoE’s response to the Commission’s consultation on the potential impact of CRR and CRD 4 on bank lending to the economy (see FReD 17 July and 23 October). The Commission will hold a conference later this year, ahead of the Commission’s final report on the issue in 2016. BoE points out that:

  • the application of standardised and internal model-based approaches for calculating credit risk has created bank distortion;
  • the one size fits all approach of CRR/CRD 4 for all banks in the EU might have contributed to some aspects of EU regulation not being fully consistent with global standards. By this BoE means that a more differentiated approach could lead to more effective competition, stronger growth and enhanced financial stability; and
  • a more proportionate approach could be adopted for many aspects of bank regulation such as remuneration policy and tailoring the system relative to bank size.

(Source: BoE Response to Capital Requirements Consultation)