The European Commission (EC) has started a consultation period to find out how the Capital Requirements Directive (CRDIV) is affecting businesses and other areas of the economy.
Capital Requirements for banks in the EU were revised following the 2008 financial crisis, under the Capital Requirements Regulation (CRR) and CRDIV, in order to strengthen the banking sector.
The consultation, launched yesterday, seeks to understand the following four points:
- To what extent have CRR and CRDIV affected the level of capital held by banks?
- Are all the new requirements under all circumstances proportionate to the risks they were meant to address?
- What impact are the rules having on lending to smaller businesses, and to infrastructure projects?
- Could some of the rules be simplified or differentiated by risk or size, without compromising on their objectives of financial soundness and stability of banks?
While the questionnaire seeks to focus on SMEs and infrastructure projects in particular, this is a chance for corporate treasurers to make their voices heard on issues that affect companies of all sizes. The areas that directly affect corporate treasurers include:
- bank credit lines to corporates,
- cash liquidity,
- bank fees,
- interest rates for deposits and
- bank-corporate relationships.
Interested parties should provide their feedback in an online questionnaire. The EC will then report back on the feedback it receives at a public hearing later in 2015. The Commission's final report is due in 2016.
Jonathan Hill, the EU's Commissioner for Financial Stability, Financial Services and Capital Markets Union, is currently promoting the EU's €315 billion Investment Plan (IP/14/2128). The timely launch of this consultation on banking regulation is part of the EU's strategy for stimulating the economy. Hill says: "Bank funding is and will remain central to our economy; whether it is lending to small businesses, or long-term investment in infrastructure. The Capital Requirements Regulation and Directive have restored resilience, stability, and trust in the European banking sector. These are vitally important objectives which the legislation has helped to achieve—but it is right to ask whether the rules have unintended consequences. This is part of our commitment to Better Regulation, and helps us strike the best possible balance between managing risk and enabling growth."
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