European Parliament approves Basel II Directives

The overall aim is to create a more sophisticated and risk sensitive approach to capital requirements used by banking regulators, better reflecting the complexity and diversity of today's financial markets. This, it is hoped, will ensure a better regulatory underpinning for the stability of the financial system and a more efficient use of capital.

The Commission published its proposals – known as the Capital Requirements Directive, albeit actually in the form of two Directives – in July. Following discussions with the Commission and Council of Ministers, the drafts have been extensively amended by the European Parliament, but are now expected to breeze through the remaining legislative formalities.