The European Commission has proposed reducing the capital requirements for the EU’s banks, in a move aimed at overhauling the regulatory framework introduced after the 2008 financial crisis.
In a communication published on Friday, the EU executive called for the removal of so-called Pillar 2 capital requirements related to the leverage ratio, which are bank-specific buffers that supervisors can demand on top of industry-wide minimum Pillar 1 standards. They are typically imposed to mitigate a specific lender’s perceived extra level of risk.
