Pursuing Multiple Objectives with the Banking Reform Package: Who can still follow? CEPS Commentary, 17 March 2017

Lannoo, Karel. (2017) Pursuing Multiple Objectives with the Banking Reform Package: Who can still follow? CEPS Commentary, 17 March 2017. [Policy Paper]

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Abstract

Multiple objectives are being pursued by the European Commission with its amendments to prudential rules in the banking reform package. On the core capital requirements side, there is the further alignment of EU rules with the Basel rules, in the leverage and net stable funding ratio, for example, and the softening of capital requirements for trading positions. On the resolution side, there is the alignment of bail-in standards TLAC (total loss-absorbing capacity) and MREL (minimum requirement for own funds and eligible liabilities) – an issue for large globally active banks. And on the bank business models side, there is the recalibration of the capital requirements for bank exposures to SMEs and the introduction of proportionality in rules – the first time this has been formally invoked.

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