ECB objects to EU plan to water down banking rules

© . Frankfurt’s skyline is depicted as the spread of the coronavirus disease (COVID-19) continues, in Frankfurt, Germany, Jan. 5, 2022. REUTERS/Kai Pfaffenbach FRANKFURT () – European Union lawmakers are not allowed to make exceptions to banks new global rules designed to prevent another financial crisis, highlighting risks related to housing and derivatives, the European Central Bank said Friday. The ECB, the EU’s main banking watchdog, welcomed the European Commission’s proposal to implement Basel III rules, but objected to some “deviations” from the letter of the globally agreed standards. In particular, it said banks should not be allowed leeway in how they account for their exposures to residential real estate, derivatives and unrated companies when calculating their minimum capital requirement, known as the ‘output floor’. “These deviations are not justified,” the ECB said in slides accompanying a legal opinion. “They should remain temporary, if kept at all.” ECB opinions are not binding, but often influence the legislative process, which is led by the Commission, the EU Parliament and Member States. The Frankfurt-based central bank called for the output floor to be applied at the EU level rather than at the national level and objected to banks ignoring historical losses when calculating their capital needs. It also urged the Commission to adhere to a timetable for the implementation of market risk rules by 2025. ECB opinions are fed back to EU governments, which then refine proposals that end up in a so-called ‘trilogue’ with the Commission, Parliament and the EU countries before they are final. This can sometimes take years. The Basell III rules became final in December 2017. Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.

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