The EU Commission has published its proposal for the introduction of Basel IV in the EU
Today, the European Commission published its proposal for updated capital adequacy rules that include the last parts of the Basel III regulatory framework, also known as Basel IV. The Basel rules are global standards for capital requirements and supervision of banks, and are developed by the Basel Committee on Banking Supervision. Within the EU, Basel standards have been introduced through the Capital Requirements Regulation (CRR) and a Directive (CRD).
The proposal entails major changes in key parts of the capital adequacy regulations, including:
- New standardised method for credit risk
- Limitations in the internal method for credit risk
- New standardised method for operational risks
- Capital floor based on standardised methods
The changes are proposed to take effect from 1 January 2025 and be phased in over a 5-year period.
The package also covers:
- Sustainability – contributing to the green transition
- Stronger supervision – ensuring sound management of EU banks and better protecting financial stability