EU ambassadors endorse rules to reduce risks in banking sector
19 February 2019 Belgium
Image: Shutterstock
EU ambassadors have reached an agreement between the Romanian presidency on a set of revised rules aimed at reducing risks in the EU banking sector.
According to the European Council of the European Union, this means that the EU will soon have in place a more robust framework to regulate and supervise banks.
This decision concludes the negotiating process, which began in November 2016.
The risk reduction package is intended to implement reforms agreed at international level following the 2007-2008 financial crisis.
Additionally, it aims to strengthen the banking sector and address outstanding challenges to financial stability.
Reforms presented in November 2016 include elements agreed by the Basel Committee on Banking Supervision and by the Financial Stability Board (FSB).
Among the core measures agreed to reduce risk in the banking system, the package enhances the framework for bank resolution, the European Council explained.
Meanwhile, the package also strengthens bank capital requirements to reduce incentives for excessive risk taking, by including a binding leverage ratio, a binding net stable funding ratio and setting risk sensitive rules for trading in securities and derivatives, it was revealed.
Additionally, the banking package contains measures to improve banks’ lending capacity and to facilitate a greater role for banks in the capital markets, according to the European Council.
As well as this, it also contains a framework for the cooperation and information sharing among the various authorities involved in the supervision and resolution of cross-border banking groups.
Eugen Teodorovici, minister of finance of Romania, said: "The risk reduction measures agreed today will ensure that banking sector holds enough capital to lend safely to consumers and businesses. At the same time, taxpayers are shielded from any difficulties which banks might be facing."
According to the European Council of the European Union, this means that the EU will soon have in place a more robust framework to regulate and supervise banks.
This decision concludes the negotiating process, which began in November 2016.
The risk reduction package is intended to implement reforms agreed at international level following the 2007-2008 financial crisis.
Additionally, it aims to strengthen the banking sector and address outstanding challenges to financial stability.
Reforms presented in November 2016 include elements agreed by the Basel Committee on Banking Supervision and by the Financial Stability Board (FSB).
Among the core measures agreed to reduce risk in the banking system, the package enhances the framework for bank resolution, the European Council explained.
Meanwhile, the package also strengthens bank capital requirements to reduce incentives for excessive risk taking, by including a binding leverage ratio, a binding net stable funding ratio and setting risk sensitive rules for trading in securities and derivatives, it was revealed.
Additionally, the banking package contains measures to improve banks’ lending capacity and to facilitate a greater role for banks in the capital markets, according to the European Council.
As well as this, it also contains a framework for the cooperation and information sharing among the various authorities involved in the supervision and resolution of cross-border banking groups.
Eugen Teodorovici, minister of finance of Romania, said: "The risk reduction measures agreed today will ensure that banking sector holds enough capital to lend safely to consumers and businesses. At the same time, taxpayers are shielded from any difficulties which banks might be facing."
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