CEPS Task Force Report on Basel II

21 April 2004

The Centre for European Policy Studies (CEPS) has finalised a new report on the forthcoming Basel Capital Accord and the future of the European Financial System. The report states among others that the EU will be the first ‘critical mass’ of countries to implement the Accord and will thus have to make sure that it works. The medium-term ambition should be the creation of a single European banking rule book.

Other highlights include:

Regulators need to come to a final agreement on the new Accord and should not let uncertainty linger.

Fair competition should be preserved between those banks that are internationally active and small- and medium-sized European banks (SMBs).

The awareness among small- and medium-sized enterprises (SMEs) of the new financing conditions needs to be increased.

Adequate defences to counter pro-cyclicality should be put in place. Efforts should continue to monitor the pro-cyclical effects of the new Accord. Dynamic provisioning is one alternative solution to cope with this in the European context.

CEPS press release

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