CRD4: proposals for safer financial firms

The CRD4 package (a draft Regulation and Directive to replace the existing Capital Requirements Directives) is a series of measures to make banks etc. in the EU more resilient in crisis situations.

The draft Regulation proposes four main areas for improvement. The two most important cover the quality and quantity of reserves and liquidity measures. These aim to ensure that banks will have surer access to funds if needed. The other two are to control excessive leverage (i.e. borrowing) and protect against problems with counterparties.

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