EU Bank Capital Requirements Regulation and Directive 


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The EU Capital Requirements Regulation (CRR) and Directive (CRD) aim to stabilise and strengthen the banking system by making banks set aside more and higher quality capital as a cushion against crises. The new rules should also foster a convergence of supervisory practices across the EU. Banks that are better able to withstand future crises should be more capable of financing investment and growth.

This background note looks at why the new rules have been set out in two legal instruments, a regulation and a directive, and how they have changed compared to the previous rules in force. After Parliament's vote, the Council needs formally to approve the rules. The Regulation and the Directive will then be published in the Official Journal (OJ) and enter into force. The new rules will apply from 1 January 2014, if published in the OJ by 30 June 2013, otherwise from 1 July 2014.