| The European Union's Council of Economic and Finance Ministers gave their approval today to the EU's Capital Requirements Directive (CRD) which had recently received a yes vote in the European Parliament. The decision means that the Directive can proceed without the need for a second reading by either the Parliament or the Council.
The Directive, which is part of the EU's Financial Services Action Plan (FSAP), will be used within the EU to implement the Basel II capital adequacy framework. The Basel II framework is more representative of modern risk management practices and will provide improved risk-sensitivity when calculating minimum capital requirements. Basel II replaces the original Accord and includes the management of operational risk as well credit and market risk.
The news was welcomed by the EU's Internal Market and Services Commissioner, Charlie McCreevy, who was full of praise on the speed of adopting CRD. The Commission originally proposed the Directive in July 2004 and it was only two weeks ago that European Parliament gave its approval. In a press statement Commissioner McCreevy said, "This important legislation will benefit consumers, businesses and Europe's economy as well as increasing financial stability. I congratulate the UK Presidency on the rapid progress that has been made with this proposal. This demonstrates that the EU is capable of acting quickly and effectively. Now we need to make sure it is implemented in a coherent way across Europe".
Member States will be required to to apply the Directive from the start of 2007, with the more sophisticated advanced calculation approaches being available from 2008. This is in line with the planned global introduction of the Basel II rules.
The full press statement on the approval of the Capital Requirements Directive is available on the European Commission website. |
