EBA has published a report for the Commission on the effects of a reduction by one third of the current risk weights (RWs) for Retail SME lending or of an increase of the regulatory threshold for SMEs from 1 to 5 million Euros. These proposals seek to neutralise the impact of the new bank capital requirements (CRD4/CRR), and particularly the capital conservation buffer, on lending to SMEs. EBA analyses the proposals on the ground of risk sensitivity, consistency of the overall framework and effectiveness, and concludes that great caution should be exercised in altering RWs or the threshold for Retail SME exposures to avoid any risk of jeopardising financial stability. It suggests a number of alternative measures that could achieve the same objectives without the shortcomings. (Source: Report on the Assessment of SME Proposals for CRD4/CRR)