CRR 3 refers to the third iteration of the Capital Requirements Regulation, forming a central component of the European Union’s banking prudential framework. This regulation sets forth detailed rules for how banks calculate and maintain their capital reserves, manage risks, and ensure financial stability across the EU. It implements international standards, such as those from the Basel Framework, into European law. The provisions aim to enhance the resilience of the banking sector, particularly in response to lessons learned from past financial crises and emerging risks.
Context
The implementation of CRR 3 is a prominent topic in financial news, especially concerning its provisions for digital asset exposures within the European banking sector. Regulators are debating how to classify and prudentially treat various crypto assets under these new rules, which will significantly impact banks’ ability to hold or facilitate digital asset activities. The framework seeks to establish a consistent regulatory approach, influencing the integration of digital assets into mainstream finance within the EU.
The Basel Committee's 1250% risk weight for unbacked crypto mandates near-prohibitive capital buffers for banks, fragmenting global prudential standards.
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