The European Union isn’t scrapping its bank capital rules. It’s just hitting the snooze button on them.
An EU official clarified on March 18 that the bloc plans only a temporary adjustment to a contentious bank capital requirement under Basel III, not a permanent removal. The move is designed to keep European banks competitive while other major economies, notably the US and UK, take their sweet time implementing the same international standards.
What’s actually changing
At the center of this is the Fundamental Review of the Trading Book, or FRTB. Think of it as a massive overhaul of how banks calculate the capital they need to hold against their trading activities.
The EU’s plan involves introducing a temporary multiplier that would offset some of the capital increases banks would face from full FRTB implementation. In English: European banks won’t have to set aside quite as much money as the rules originally demanded, at least not yet.
