How the new EU regulation will strengthen Luxembourg's banking sector
Fachrizal Maulana, Unsplash
Luxembourg Finance Minister Gilles Roth commented on the implementation of the European Regulation CRR3, adopted on 31 May 2024. This document is aimed at increasing the stability of the European financial system, strengthening the protection of depositors and reducing the risks associated with financial crises. The new regulation is based on the recommendations of the Basel Committee on Banking Supervision and provides for stricter requirements for banks' capitalisation, credit, market and operational risk management.
According to the Commission de Surveillance du Secteur Financier (CSSF), Luxembourg banks already have capitalisation in excess of the minimum CRR3 requirements. This means that the implementation of the new rules will not lead to a reduction in lending or an increase in the cost of mortgage loans. The highly competitive market also favours the continued availability of borrowed funds.
The Ministry of Finance emphasises that it is important to maintain a balance between tightening regulation and controlling banks' costs of compliance with the new requirements. This will ensure the sustainability of the banking system without reducing its competitiveness.
CRR3 represents an important step towards building confidence in the financial system of Luxembourg and the European Union as a whole. The new regulation is designed to ensure that banks are resilient to potential economic shocks.
