Commissioner Barnier presented the following key issues on CRD IV:

• Around 8,200 banks in Europe will be affected by CRD IV, which represents 50 per cent of the total global assets hold by banks. The US will only apply Basel III to its 20 biggest banks, which represent only 10 per cent of the total global assets. 

• The Commission wants European banks to hold more own funds.

• Prudential regulation is a priority for the Commission; banks will have to have to hold a significant liquidity buffer in case of an overheating of the credit cycle. This will avoid the situation where banks stop lending to the real economy, as has happened during the current crisis.

• Banks will have to manage their short-term and long-term liquidity.

• A better design leverage ratio will be considered when investing in OTC derivatives.

• Between now and 2019, European banks will need to raise capital by €400 billion, which will make the financial system more resilient to future possible crises.

• In some areas, the Commission has gone further than Basel III, for instance in the corporate governance of banks.

Barnier argued that the Commission decided to adopt a regulation because it is not just about transposing Basel III but also about having a single rule book which will be better transposed through a regulation. Barnier believes that the EU needs the same rules for all Member States. However, he stressed that flexibility is also considered in CRD IV, for instance each Member State will be allowed to decide the countercyclical buffer they want to apply to their banks. He also mentioned that the Commission has considered the real economy’s needs and CRD IV takes into account the diversity of the European banking sector and the SME’s necessities.

 

When asked what the Commission will do if the US does not implement Basel III, Barnier answered that he is confident that the US will implement it. Furthermore, he could not think of any of the G20’s signatories not implementing the G20 commitments.