I welcome the ambitious agreement on capital and liquidity requirements for the banking sector, reached yesterday evening in Basel by the Group of Governors and Heads of Supervision of the central banks, chaired by Mr Trichet, whose personal commitment helped reach this important result for Europe and the world. The European Commission wishes keenly to see this agreement confirmed by the Heads of State and Government at the G20 meeting in Seoul in November.

This agreement has struck the right balance. We are learning the lessons of the crisis in requiring better capitalisation for our banks and larger liquidity cushions, two essential elements for stronger stability in our financial system. Furthermore, the agreement also takes account of the essential role of banks in the European and global economic recovery, in particular its role in lending to the real economy.

 

I would like to highlight three elements of the agreement:

 

In the first place, the ambition and steadfastness of the European position contributed to reaching this ambitious agreement. The European Commission committed itself fully to the process.

 

Secondly, this agreement will allow financial stability to be significantly strengthened thanks to the higher requirements for banks, for both the quantity as well as the quality of their regulatory banking capital. Common equity requirements will rise from 2 percent to 7 percent of assets while total capital requirements will, for the first time; pass the bar of 10% of assets by 2019. This agreement will have a major impact for our continent as Europe is home to half of the world’s global banking assets.

 

Thirdly, I think that the transition period to reach these ambitious objectives is the right one: it is sufficiently long to allow for gradual improvements and hence not put economic growth in danger.

 

Once this agreement is confirmed by the G20 in November, the Commission will propose, in the first quarter of 2011, the necessary legislative texts to transpose into European law the principles agreed yesterday evening. This legislation will take the form of a revision of the directives on capital requirements („CRD 4”). It will be accompanied by an in-depth impact assessment which will allow us to ensure the right calibration of our proposals – as much in the timetable of measures, as their global impact and taking account of developments in other regions of the world.