Chair of the Supervisory Board of the European Central Bank (ECB) Andrea Enria and Vice President of the ECB Luis de Guindos Friday criticized proposed EU banking regulations in a joint publication.

The regulators argued that compliance with the Basel III accord is needed for strong banks, claiming “strong rules lead to strong banks, and strong banks are better able to serve firms, citizens and the economy at large,” and “the current geopolitical disorder shows how important it is to safeguard cohesion and cooperation at global level.” The EU postponed fully implementing the Basel III accord due to the economic impact of COVID-19.

The Basel Committee was established in 1974 by the G10. It is responsible for creating standards on international banking cooperation and supervision. The Committee is responsible for the Basel accords, which are essentially publications on the appropriate amounts of risk for banks to take. The Basel III accord was developed in 2010 in response to the financial crisis of 2007-2008. In 2017, the Basel III finalization accord was published and has not been implemented in Europe or the United States. The Basel Committee suggested that the COVID-19 pandemic demonstrated a need for additional banking reform, yet large US banks entered the pandemic with strong and robust capital levels that have only grown stronger during the course of the pandemic.

The regulators called upon co-regulators to fully implement the Basel III accord, noting “Europe sat at the negotiating table in Basel, and the final agreement consequently incorporates many suggestions and adjustments put forward by European actors. Claims that the agreement is not a good ‘fit’ for the EU financial sector are therefore misleading.” Likely a reference to Markus Ferber, a German MEP, who said “the compromise struck in the Basel Committee is not a good fit for the European economy.” In particular, Ferber was concerned with Basel III’s  sustainability requirements for banks, arguing “[t]he Commission’s attempt to introduce sustainability considerations into banking regulation puts us on a dangerous path. . . We need to make banks safer, not greener.”