EU to transpose new Basel rules into law next year

19:18, September 15, 2010      

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The European Commission has announced that it will transpose new capital rules for banks agreed under the Basel deal into law next year, while the European Parliament said much work need to be done concerning the new standards, local press reported Tuesday.

"Once this agreement is confirmed by the G20 in November, the Commission will propose, in the first quarter of 2011, the necessary legislative texts to transpose into European law the principles agreed yesterday evening," European Commissioner for Internal Market and Services Michel Barnier was quoted as saying.

Barnier said that this legislation will take the form of a revision of the directives on capital requirements and will be accompanied by an in-depth impact assessment.

Barnier welcomed "the ambitious agreement on capital and liquidity requirements for the banking sector," saying that the new deal will significantly strengthen financial stability due to the higher requirements for banks.

According to the Basel III reached by global regulators and central bank governors on Sunday, common equity requirements for banks will rise from 2 percent to 7 percent of assets while total capital requirements will pass the bar of 10 percent of assets by 2019.

As co-legislator, the European Parliament said on Monday that the new capital requirement standards tackle some of the right issues, but need much more work to transpose them into law.

A resolution passed by Parliament's Economic Affairs Committee, said no analysis has been undertaken of the effects on the real economy of the figures agreed in Basel. It urged the Commission to produce a comprehensive assessment of the consequences of the new standards.

The resolution also expressed worry that the recently-passed laws in the US could lead to serious inequalities in the implementation of the current Basel standards (Basel II) and those agreed upon this week. It called on the European Commission to address concerns about the lack of a global level playing field.

After the European Commission put forward its legislative proposal next year, the European Parliament will negotiate a final agreement with delegates from the EU member states on a legal text.

Source: Xinhua


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