The EBF generally welcomes the agreement on the final shape of the Basel framework. Banks, their investors and financial analysts now can carefully analyse the finalised framework so that they can plan with certainty for the new end-state capital requirements.
The European banking sector is firmly committed to financing growth and prosperity in Europe. The EBF now notes that the Basel Committee has adopted measures that may unbalance risk sensitivities and that could threaten financing in the European economy by penalising low-risk exposures, particularly residential mortgages. These can be adversely affected by the Basel Committee’s decision to introduce an output floor.
In its view, there is a clear risk that the costs of the measures for the EU economy as a whole will outweigh the benefits. Therefore, the EBF now calls for a rigorous assessment of the impact on the banking sector and the economy. Before any decision is made on incorporating the newly finalised Basel III framework in EU regulation, the impact of these measures, particularly the output floor, needs to be determined.
Says Wim Mijs, Chief Executive Officer of the EBF:
“This agreement marks the end of the wave of global regulations stemming from the 2007 financial crisis. That is very good news. However we should not lose sight of the fact that the output floor may do significant harm to our European economy and to the global competitiveness of European banks. The output floor could impair the benefits of the finalised Basel III package and endanger the balance, so it is important that all parts of the world introduce the new requirements in a harmonised way.”
Press release
© EBF
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