It is necessary to investigate the most appropriate option for implementing the final Basel III rules. Therefore, the Belgian banking sector makes a few concrete proposals to better align the reforms with the Belgian economy. The proposals, technical in nature, are intended to reduce the significant increase in banks' capital buffers and to limit the negative impact on the financing of the public sector and unrated companies. Maintaining optimal bank financing to SMEs is obviously particularly important in these post-covid times.
In other words, how to implement the final Basel III package without significantly increasing the capital requirements for banks, and thus limiting the impact on the economy and customers?
Because even if Belgian banks are well prepared and have made the necessary efforts in recent years to increase their resilience, the reforms cannot be transposed blindly into European legislation. Implementation must consider the economic impact of increased capital requirements and the characteristics of the Belgian market. Moreover, the banking sector still has to deal with the consequences of the corona crisis as a priority, so an additional negative shock is far from desirable.
Both to ensure economic and financial stability, the impact on capital requirements should be as limited as possible. In this way, the cost of credit for consumers remains within limits. In line with the Basel objective, banks always remain alert to potential risks and maintain sufficient reserves to be able to absorb shocks and continue to guarantee the granting of credit.