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

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  • Frank Dierick
  • Fatima Pires
  • Martin Scheicher
  • Kai Gereon Spitzer
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    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.

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    File URL: http://www.ecb.europa.eu/pub/pdf/scpops/ecbocp42.pdf
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    Bibliographic Info

    Paper provided by European Central Bank in its series Occasional Paper Series with number 42.

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    Length: 56 pages
    Date of creation: Dec 2005
    Date of revision:
    Handle: RePEc:ecb:ecbops:20050042

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

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    References

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    13. Filippo Altissimo & Evaggelia Georgiou & Teresa Sastre & Maria Teresa Valderrama & Gabriel Sterne & Marc Stocker & Mark Weth & Karl Whelan & Alpo Willman, 2005. "Wealth and asset price effects on economic activity," Occasional Paper Series, European Central Bank 29, European Central Bank.
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    Cited by:
    1. Staszkiewicz, Piotr W., 2010. "Ryzyko struktury: Rys koncepcyjny
      [The Risk of the Structure: Initial proposal]
      ," MPRA Paper 34257, University Library of Munich, Germany, revised 01 May 2011.
    2. Ines Drumond, 2009. "Bank Capital Requirements, Business Cycle Fluctuations And The Basel Accords: A Synthesis," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 23(5), pages 798-830, December.
    3. Andersen, Henrik, 2011. "Procyclical implications of Basel II: Can the cyclicality of capital requirements be contained?," Journal of Financial Stability, Elsevier, Elsevier, vol. 7(3), pages 138-154, August.
    4. Philipp Paulus, 2006. "Brüssel, Frankfurt oder Basel - Wo muss das Problem steigender Staatsschulden in der Europäischen Währungsunion gelöst werden?," Otto-Wolff-Institut Discussion Paper Series, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland 01/2006, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.

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