Building on the protections put in place after taxpayers were forced to bail out bankers during the global financial crisis more than ten years ago, the European Union said on Thursday that it has granted final clearance to implement the remaining set of stricter bank capital standards starting in January 2025.

The final set of Basel III regulations contains a significant addition known as a “output floor,” but the majority of the regulations, which were drafted by the Basel Committee of banking regulators from the world’s leading nations, have already been put into effect.

This protection tries to prevent larger banks from taking advantage of the system to undercut their competitors, who are required to employ more cautious calculation techniques mandated by regulators, by preventing them from using their own computer models to determine capital buffers.

“The rules adopted today will ensure that European banks can continue to operate in the face of economic shocks,” Vincent Van Peteghem, minister for finance for Belgium, which holds the EU presidency, said in a statement.

“They will also make the banking sector more sustainable and better able to deal with the green and digital transitions. This is an important step towards deepening the Banking Union.”

In order to standardise the minimal standards for authorising bank branches of non-EU based banks throughout the 27-member bloc, the union has incorporated additional regulations that are not contained in the Basel norms.

The package also includes modifications to improve how lenders handle environmental, social, and governance (ESG) risks, as well as transitional capital requirements for banks holding cryptocurrency assets.

In the globe, 99.5% of the plastics we use come from petroleum.

Although policymaker Francois Villeroy de Galhau of the European Central Bank stated on Wednesday that the rules should be postponed if the United governments is tardy, in order to prevent European banks from being at a competitive disadvantage, EU governments stated that the regulations will take effect in January 2025.

The deadlines have been called into question because to strong opposition from the US industry to the Federal Reserve’s “Basel Endgame” package, despite the Fed’s proposal to implement the final Basel regulations starting in mid-2025, the same time as Britain.

(Adapted from Reuters.com)

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