The European Union reached an agreement today, Tuesday, on the implementation of the final stage of stricter internationally agreed banking capital rules following the global financial crisis over a decade ago, incorporating additions to contain risks from the cryptocurrency sector.
The remaining part of the global "Basel III" agreement, which was agreed upon by the Group of Twenty and other countries, includes safeguards such as imposing restrictions on major banks that use their internal models to calculate capital reserves.
The collapse of Silicon Valley Bank and other U.S. banks, and the subsequent effects across Europe, along with the forced acquisition of the smaller competitor Credit Suisse by UBS, have highlighted banking capital and liquidity. Swedish Finance Minister Elisabeth Svantesson, who is presiding over the EU, stated, “This is a significant step forward that will help ensure that European banks can continue to operate even in light of external shocks, crises, or disasters.”
The provisions of the Basel III agreement will be implemented among EU countries and the European Parliament in phases starting in 2025, two years after the globally agreed deadline. The package includes new elements to protect banks from risks associated with the cryptocurrency sector and to ensure improved reporting methods and disclosures regarding fossil fuels.
It also tightens requirements for EU banks opening branches in third countries or establishing banks outside the EU, supervising their activities within the bloc, an issue that arose after the UK's exit from the EU. Additionally, new rules ensure that senior executives in banks are "fit and proper" for their roles.
The EU is the first major authority with jurisdiction to reach an agreement on the remainder of the Basel III rules, ahead of the UK and the United States.
