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EU NEWSBRIEF: Making European Banks More Solid

The European Union is set to make its banking sector more resilient to financial shocks following EU’s Finance Ministers unanimously approving stricter capital requirements for banks and investment firms.

“The rules we are proposing are crucial: once adopted, they will profoundly alter the behavior and solidity of financial actors,” said Internal Market and Services Commissioner Michel Barnier.

“Our overall objective remains to strengthen the resilience of the banking sector in the EU while ensuring that banks continue to finance economic activity and growth. The final compromise must contribute to financial stability, the necessary basis for growth and employment.”

The proposals will turn into law a comprehensive set of international standards known as the Basel III agreement. It is expected that the EU will thereby become the first area in the world to enact the measures developed by the Basel Committee for Banking Supervision and endorsed by the G20 leaders in 2010.

“In the coming weeks, we need to find a global agreement to meet our Basel III commitments on time,” added Commissioner Barnier. “Now more than ever, we need unity on bank regulation. Weak bank capitalization, weak and poorly harmonized liquidity rules, and fragmented and uncoordinated supervision were all contributing factors to the financial crisis.”

The agreement provides a basis for negotiations with the European Parliament.

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