On 7 October 2010, the European Parliament adopted an own-initiative resolution on implementation of the recently agreed Basel Capital Standards (known as Basel III) into EU law. Basel III will be implemented by way of a directive amending the Capital Requirements Directive (2006/48/EC and 2006/49/EC) (CRD), known as CRD 4.
The resolution gives an indication of the position the Parliament will take when it considers the European Commission's CRD 4 proposal. The Commission is expected to publish this proposal in spring 2011.
Key points in the resolution include:
- consideration must be given to the cumulative impact on banks of Basel III and all other regulations currently in force or being produced.
- the Commission should carry out a comprehensive assessment of the consequences of Basel III on the real economy.
- the Commission must closely consider the eligibility criteria for core tier 1 capital.
- US laws could lead to serious inequalities in implementing Basel III globally. The Commission needs to look into this.
- care needs to be taken with regard to the use of the "leverage ratio" concept. It could create adverse incentives, and may be designed in a way that does not include off-balance sheet items or derivatives.