The New Basel Capital Framework and its Implementation in the European Union

58 Pages Posted: 28 Dec 2005

See all articles by Frank Dierick

Frank Dierick

European Central Bank (ECB)

Fatima Pires

European Central Bank (ECB)

Martin Scheicher

European Central Bank (ECB)

Kai Gereon Spitzer

Deutsche Bundesbank

Date Written: December 2005

Abstract

Following the adoption by the Basel Committee of new capital rules for banks, a process is now taking place in the EU to transpose the rules into Community law and, ultimately, into national legislation. This paper gives an overview of the main issues that relate to the EU implementation, mainly from the perspectives of financial stability and financial integration. Although the EU rules are to a large extent based on the texts of the Basel Committee, modifications have been introduced to account for the specific legal and institutional setting, as well as for some features of the European financial system. The paper gives an overview of these modifications and deals in greater detail with a number of selected topics: the monitoring of procyclicality, the role of the consolidating supervisor and the treatment of real estate lending and covered bonds. The paper concludes with an outlook for the future.

Keywords: Banks, Basel II, capital requirements, financial regulation, financial stability, financial supervision, risk management

JEL Classification: G21, G28

Suggested Citation

Dierick, Frank and Pires, Fatima and Scheicher, Martin and Spitzer, Kai Gereon, The New Basel Capital Framework and its Implementation in the European Union (December 2005). ECB Occasional Paper No. 42, Available at SSRN: https://ssrn.com/abstract=807416

Frank Dierick (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Fatima Pires

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Martin Scheicher

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 (Phone)
+49 69 1344 7949 (Fax)

HOME PAGE: http://www.ecb.europa.eu

Kai Gereon Spitzer

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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