EU Commission to Announce New Bank Capital Standards Around September-October

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] As the European Union (EU) Commission plans to introduce new bank capital standards, some EU member states including Germany are demanding a relaxation of the capital requirements, major foreign media reported on the 9th (local time).

The Commission is scheduled to unveil strengthened bank capital standards as part of the Basel III reforms around September to October. Germany, France, Denmark, and the Netherlands oppose the Commission's capital standards, arguing that they are too strict and could lead to a weakening of the EU's competitiveness.

According to an analysis report released by consulting firm Copenhagen Economics on the same day, under the new capital standards, Eurozone banks are estimated to need to raise an additional 170 billion to 230 billion euros in capital or reduce loans by about 600 billion to 700 billion euros. Copenhagen Economics estimated that as a result, the loan costs for EU companies would increase by 0.25 percentage points and the EU's gross domestic product (GDP) would decrease by 0.4%.

Joerg Kukies, German Deputy Finance Minister, stated that a practical solution is needed that complies with the Basel standards while also respecting the EU's political obligations. He emphasized the need to find a compromise that satisfies both the Commission and the member states opposing the new capital standards. Given the significant economic shocks caused by COVID-19 over the past year, there is a consensus that the new capital standards should not become a factor weakening the EU's competitiveness, and there are prospects for compromise.

The new capital standards, expected to be the most significant reform in EU banking in a decade, will be applied from 2023 to 2028. The implementation timeline was delayed by one year from the original plan due to the COVID-19 pandemic.

This content was produced with the assistance of AI translation services.