EBA issues second report on Basel III implementation impact and assessment of its effect on the EU economy

EBA issued second report on Basel III implementation impact and assessment of its effect on the EU economy. The report comes as a complementing piece of advice on the implementation of the Basel III reforms in the EU, to the report issued on 5th August 2019. While the first part focused on the quantitative analysis of the impact and policy recommendations on credit risk, operational risk, output floor and securities financing transactions, the most recent report includes the impact assessment triggered by the implementation of CVA and market risk reforms.

At the beginning of 2016, The Basel Committee on Banking Supervision (BCBS) issued the revised framework for market risk (the fundamental review of the trading book — FRTB), while in January 2019 it made several amendments to it. The framework will be applied from January 2022, together with the remaining Basel reforms.

This article provides further insight on the impact of the assessment (overall, by risk type, macroeconomic) and the main policy recommendations.