Capital Requirements Directive in Europe: The game is not over…

European bankers and regulators breathed a sigh of relief when the Capital Requirements Directive (CRD) got through the Parliament after a last-minute compromise deal that secures its power under comitology. The Directive was formally adopted by the Council of Ministers from the 25 member states and expected to be fully enacted law by March or April 2006 after it is translated into their respective languages and published in the Official Journal.

Almost seven years of a tedious and demanding process, the game seems to be over. The new CRD will finally apply the complex, risk-sensitive Basel II capital adequacy rules to some 8000 European banks and some 2000 investment firms in two stages, the first in January 2007 and the second one year later.