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EU heads of state and government meeting in Brussels on Friday (24 March) will discuss recent financial market turmoil, and while calls for deepening the Capital Markets Union and finalising the Banking Union are expected, decisions on specific measures are not.
“The situation is not comparable to the United States,” Belgian Prime Minister Alexander De Croo said, speaking to journalists on Thursday night (23 March), indicating that European banking regulation seemed to have prevented some of the risks from destabilising EU banks.
The collapse of the Silicon Valley Bank in the US and the fall and forced takeover of Credit Suisse have given new urgency to the debate that EU leaders are set to hold together with the president of the European Central Bank (ECB), Christine Lagarde.
Talking to members of the European Parliament earlier this week, Lagarde confirmed that European banks were currently well-capitalised and liquid, but she also called for a strict alignment of EU banking regulation to the international Basel III principles.
The EU is currently reviewing the capital requirements for banks to align them with the Basel III principles. However, EU member states and the European Parliament tried to introduce exceptions to the rules in the past month, triggering criticism from the ECB for making the EU rules non-compliant with international standards.
The debate might now be relaunched with some members of the European Parliament (MEPs) calling for stricter adherence to the Basel III principles for bank capital requirements.
However, discussions are likely to stay more general during Friday’s meeting. “We don’t expect a very spectacular breakthrough,” one member state diplomat said.
An official from another member state said he expected to see a general call for working towards a Banking Union but doubted that any specific steps would be discussed in detail.