Basel Committee Reaches Provisional Agreement on Implementation of Basel III Reforms Including Enhanced Proportionality Rules

After negotiations between the Council presidency and the European Parliament, the Basel Committee has reached a provisional agreement on the implementation of Basel III regulatory reforms, specifically involving amendments to the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD). The Basel Committee hopes these reforms will strengthen the resilience of banks operating within the European Union. 

Negotiations also led to additional agreements related to the provisional agreement which include implementation of the “output floor, limiting banks' variability of capital levels computed by using internal models, and the appropriate transitional arrangements to allow sufficient time for market players to adapt.” They also agreed on improvements to credit risk, market risk and operational risk; enhancement to proportionality rules, specifically for small and non-complex financial institutions; a transitional prudential regime for crypt assets; amendments to improve ESG risk management, and harmonization of other frameworks to strengthen bank resiliency.

More information on the provisional agreement reached on Basel III reforms is available here.