The European Union has approved the package of banking reforms aimed at reducing financial risks in the sector.
The new set of reforms was originally proposed by the European Commission in November 2016 to address the issues uncovered during the financial crisis in the last decade.
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In December last year, the EU reached a provisional political agreement to introduce the new regulations.
Banking reforms: Details
The new set of rules prescribes level of capital banks must hold to cover unexpected losses and withstand economic shocks. A strong capital and liquidity position will also enable them to compete with global lenders.
As per the framework, when a bank fails, savings of the depositors should be protected at a uniform level of €100,000 across the EU member states.
Additionally, any bank failure should be resolved using funds provided by the lenders, with minimum impact on taxpayers.
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By GlobalDataThe new laws will bolster legal framework across the EU to tackle money laundering. Additionally, they are also aligned with the global standards of banking adopted after the financial crisis.
Besides making the banking sector more resilient to shocks, the new reforms are expected to make the banking sector growth-friendly.
In a separate voting, the EU lawmakers also adopted the proposals of increasing the powers of EU financial supervisors.
The European Commission planned to empower the European Banking Authority (EBA) with anti-money laundering supervision.
