Implementing Basel III in Europe: disgnosis and avenues for improvement. CEPS Policy Brief No. 275, 27 June 2012

This Policy Brief provides a preliminary diagnosis of the proposed regulatory reforms contained in the Capital Requirements Directive and Regulation (CRD IV-CRR), which translate into EU law the Basel III standards adopted by the Basel Committee for Banking Supervision, and suggests avenues for improvement. The main criticism is that the proposal is not ambitious enough. In some crucial areas, such as the leverage ratio and the long-term liquidity requirements adopted under the Basel III framework, the CRD IV-CRR proposal stops short of making a strict commitment to introduce binding requirements and instead is contented with weaker (and possibly divergent) disclosure requirements.

Bank bonus compromise bodes ill for the Single Supervisory Mechanism. CEPS Commentary, 8 March 2013

The European Parliament has probably won a Pyrrhic victory with its position on bank bonuses, argues CEPS CEO Karel Lannoo in this new Commentary. In return, EU member states got what they wanted with the new Capital Requirements Directive (CRD IV): no binding leverage ratio; mortgage risk weightings and capital add-ons to be determined by member states; and no obligatory consolidated capital position for bank-insurance companies. In other words, Banking Union will start out with capital rules that are more like Emmental cheese than a single rulebook. This is a huge encumbrance for a well-functioning Single Supervisory Mechanism (SSM), and makes a single resolution mechanism impossible.