Regulatory Alerts2026-06-11
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Understanding the banking sector capital framework in the European Union
Skirmantas Dzezulskis, Massimo Libertucci, and Samuel McPhilemy, in an ECB Occasional Paper, describe and evaluate the European Union's banking sector capital framework, focusing on the implementation of international Basel standards. The paper quantifies the capital impact of EU-specific regulatory choices, supervisory measures, and macroprudential policies, finding that most EU capital requirements derive from Basel standards, with EU-specific elements having a limited impact. It concludes that EU capital requirements are broadly comparable to other jurisdictions and largely align with international standards, noting that while the largest EU banks would face stricter requirements under current US rules, mid-sized EU banks would be subject to less stringent ones.