Acta Oeconomica Pragensia 2013, 21(6):45-64 | DOI: 10.18267/j.aop.420

Capital Requirements Directive IV and Basel 3 - Benefits, New Rules and Their Impact

Tomáš Šťastný, Tomáš Čech
Vysoká škola ekonomická v Praze, Fakulta mezinárodních vztahů (stastny.tom@gmail.com), Ernst & Young, Praha (tomas.cech01@gmail.com).

This article is devoted to the banking sector regulation in the European Union and worldwide. The banking regulation is used to control banking risk activities and sustainable portfolio growth. Basel Committee on Banking Supervision (BCBS) coordinates this regulation process and supervision in the world. BCBS prepared the latest regulation called Basel 3. The European Union implemented Basel 3 with legislative package called CRD IV. We describe Basel 3 and CRD IV provisions with focus on capital adequacy, liquidity and leverage. CRD IV improves the capital quality and brings new capital buffers for systemic important institutions and systemic risk, conservative buffer and countercyclical buffer. CRD IV strengthens liquidity and leverage regulation. There are introduced three controlled ratios: liquidity coverage ratio (LCR) for short-termed liquidity, net stable funding ratio (NSFR) for long-termed liquidity and leverage ratio (LR) for leverage analysis. They are calibrated. There are described differences among these documents. Finally, we sum up assessment studies about Basel 3 and CRD IV impact on the European banking sector and economy.

Keywords: Basel 3, CRD IV, capital adequacy, single rulebook, capital buffer, liquidity, regulation, supervision, banks, European Union
JEL classification: F3, F4, G1, G2, K2, K3, K4

Published: October 1, 2013  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Šťastný, T., & Čech, T. (2013). Capital Requirements Directive IV and Basel 3 - Benefits, New Rules and Their Impact. Acta Oeconomica Pragensia, 21(6), 45-64. doi: 10.18267/j.aop.420
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. BCBS. Basel 3: A global regulátory framework for more resilient banks and banking systems. Basel : Basel Committee on Banking Supervision, 2011.
    2. BCBS. Group of Governors and Heads of Supervision endorses revised liquidity standard for banks. Basel : Basel Committee on Banking Supervision, 2013.
    3. BCBS. International framework for liquidity risk measurement, standards and monitoring. Basel : Basel Committee on Banking Supervision, 2010.
    4. BCBS. Proposals for international leverage ratio and associated disclosure requirements released by the Basel Committee. Basel : Basel Committee on Banking Supervision, 2013a.
    5. BCBS. Revisions to the Basel 2 market risk Framework. Basel : Basel Committee on Banking Supervision, 2009.
    6. BCBS. Strengthening the resilience of the banking sector. Basel : Basel Committee on Banking Supervision, 2010a.
    7. CRD IV. Smernica Európskeho parlamentu a Rady EÚ 2013/36/EU zo dňa 26. júna 2013. Brussels : European Commission, 2013.
    8. CRR. Nariadenie Európskeho parlamentu a Rady EÚ č. 575/2013 zo dňa 26. júna 2013. Brussels : European Commission, 2013.
    9. EBA. Capital buffers for addressing market concerns over sovereign exposures. London : European Banking Authority, 2011.
    10. EC. A comprehensive EU response to the financial crisis: a strong financial framework for Europe and a banking union for the eurozone (MEMO/13/679). Brussels : European Commission, 2013b.
    11. EC. Capital Requirements - CRD IV/CRR - Frequently Asked Questions (MEMO/13/690). Brussels : European Commission, 2013.
    12. EC. Commission proposes new ECB powers for banking supervision as part of a banking union (IPI12/953). Brussels : European Commission, 2012.
    13. EC. Commission proposes Single Resolution Mechanism for the Banking Union (IPI13I674). Brussels : European Commission, 2013a.
    14. GESTEL, T. Van; a BAESENS, B. Credit risk management: basic concepts : financial risk components, rating analysis, models, economic and regulatory capital. 1. vyd. Oxford : Oxford University Press, 2009, xvi. 535 s. ISBN 978-019-9545-117.
    15. GREUNING, H van; a BRAJOVIC BRATANOVIC, S. Analyzing and managing banking risk: a framework for assessing corporate governance and financial risk. 2. vyd. Washington : The World Bank, 2003, xvi. 367 s. ISBN 08-213-5418-3. Go to original source...
    16. HÁRLE, P Basel 3 and European banking: Its impact, how banks might respond, and the challenges of implementation. London : McKinsey, 2010.
    17. HÁRLE, P Basel 3: What the draft proposals might mean for European banking. London : McKinsey, 2010a.
    18. KELLY B. J.; MCGARRY H. L. Basel 3 and Solvency II: Issues for the ABS market and the real economy. London : Weil, Gotshal & Manges, 2012.
    19. KRUCK, A. Private ratings, public regulations: credit rating agencies and global financial governance. New York : Palgrave Macmillan, 2011, xvi. 205 s. Transformations of the state series. ISBN 9780-230-28223-0.
    20. LAUŠMANOVÁ, M. Basel 3 - Požadavky nové regulace a její dopad na bankovní sektor. Praha : Česká spořitelna, 2010.
    21. MEJSTŘÍK, M.; PEČENÁ, M.; TEPLÝ P Základní principy bankovnictví. 1. vyd. Praha : Karolinum, 2008. 627 s. ISBN 978-802-4615-004.

    This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY 4.0), which permits use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content