The proposals are intended to implement reforms agreed at international level following the 2007-2008 financial crisis to strengthen the banking sector and address outstanding challenges to financial stability. Presented in November 2016, they include elements agreed by the Basel Committee on Banking Supervision and by the Financial Stability Board (FSB).
The agreed measures deliver on three of the key objectives set out by the Council roadmap on completing the banking union agreed in June 2016:
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enhancing the framework for bank resolution, in particular the necessary level and quality of the subordination of liabilities (MREL) to ensure an effective and orderly "bail-in" process.
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introducing the possibility for resolution authorities to suspend a bank's payments and/or contractual obligations when it is under resolution - the so-called "moratorium tool" -, so as to help stabilise the bank's situation.
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strengthening bank capital requirements to reduce incentives for excessive risk taking, by including a binding leverage ratio, a binding net stable funding ratio and setting risk sensitive rules for trading in securities and derivatives.
In addition, the banking package contains measures to improve banks' lending capacity and to facilitate a greater role for banks in the capital markets, such as:
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reducing the administrative burden for smaller and less complex banks, linked in particular to reporting and disclosure requirements;
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enhancing the capacity of banks to lend to SMEs and to fund infrastructure projects;
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reducing the costs of issuing/holding certain instruments, such as high quality securitisation instruments or covered bonds;
The banking package also contains a framework for the cooperation and information sharing among the various authorities involved in the supervision and resolution of cross-border banking groups. The agreed measures preserve the balance achieved by the Council position between the powers of home and host supervisors in order to facilitate cross-border flows of capital and liquidity, while ensuring an adequate level of protection for depositors, creditors and financial stability in all member states. The agreement also introduces amendments to improve cooperation between competent authorities on matters related to the supervision of anti-money laundering activities.
Press release
© European Council
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