2021-09-07
This autumn, the European Commission will publish a proposal for updated capital adequacy rules for banks within the EU.
The Bank of Lithuania and 24 other central banks and financial supervisory authorities are calling for the European Commission to ensure this proposal follows the global regulation standards known as Basel III. The joint letter (501.7 KB download icon) of these institutions particularly emphasises that the output floor for risk-weighted assets and the standardised approach for credit risk should comply with the international agreement. Moreover, the application of the output floor at all consolidation levels, consistent with other prudential requirements, such as the leverage ratio, should be considered. The EU should not introduce any specific additional deviations from the rules. Deviating from the Basel agreement could have a negative impact on confidence in both the European banking sector and the EU regulatory framework. This in turn risks leading to negative consequences for the banks and the economies in general. It is therefore especially important that the global agreements are met in full, on time and in a consistent manner.
About Basel III