Capital Requirements Directive (Basel II) (Directive)
The Capital Requirement Directive (“Basel II“), which is mainly based on negotiations held by the international Basel II Committee of the Bank for International Settlements, constitutes the core of banking regulation. The Commission's new proposals aim at improving the effectiveness of the existing Directive and at increasing the stability of financial markets. The Commission's proposal focusses on inter-bank credits, securitisation and the restructuring of supervision. With its Proposal the Commission expedites the process: It is no longer willing to await the results of the Basel II Committee. The amended Directive is scheduled for adoption for early June.
Due diligence for credit-granting and qualitative requirements for investments in securitised exposures add to the stability of financial markets. The establishement of supervisory colleges is overdue. However, the obligation to retain 5% of the securitised exposures in the books should be waived as well as the inclusion of large inter-bank credits into large exposures; moreover, procyclical effects should be taken account of more thoroughly.