Answer given by Lord Hill on behalf of the Commission

4.9.2015

The Commission refers the Honourable Member to the answer given to Question E-006331/2015.

The EU’s Capital Requirements Regulation is fully consistent with the ‘Basel Accord’ as regards the use of the zero risk-weight for sovereign exposures. Both allow the use of the so-called standardised approach for determining capital requirements. Under that approach, sovereign exposures denominated and funded in domestic currency may receive a zero risk weight. Under the Basel Accord, jurisdictions may take account of their own specificities when applying risk weightings.

The treatment of sovereign exposures follows the Basel II framework and was not changed by Basel III. Following an emerging debate on the issue initiated in the G7, the Basel Committee has set up a working group to consider the treatment of sovereign exposures. The Commission is closely involved in this debate and will give careful consideration to any regulatory change which may be recommended at international level. This work is at a very preliminary stage. Consequently, the Commission cannot give any indications about the impact on government bonds or SME funding of potential changes in the regulatory treatment of sovereign exposures, since such changes are not being considered at this stage.