Mark Foster, Partner, Kreab
You know the feeling when you are still eating the main course, but your fellow diners are already talking about dessert? Well, something similar is happening in EU banking regulation: banks and policymakers are still digesting Basel III leftovers, whilst “Basel IV” is on the verge of being served up!
In the wake of the financial crisis, Basel III was originally conceived to strengthen the resilience of the financial system by introducing measures to increase banks’ capital, liquidity and stable funding. Today, there remains an ongoing work-stream on implementation of the Basel III leftovers. The European Commission is expected to publish a proposal reviewing CRR/CRD IV later this year (most likely early December). The review will introduce a binding leverage ratio, likely set at three per cent, with a surcharge for G-SIBs. Complementing existing liquidity rules, the Net Stable Funding Ratio will provide a 12 month stable funding in addition to existing 1-month rules (LCR). With new provisions on the standardised approach on counterparty credit risk and the fundamental review of the trading book, the Basel Committee has added a second helping of main course!
The full post is available here.