- to eliminate legislative differences among member states
- ensure the same level of protection for consumers
- ensure a level playing field for banks across the EU
The single rulebook is the backbone of the banking union and of financial sector regulation in the EU in general. It consists of legal acts that all financial institutions (including approximately 8 300 banks) in the EU must comply with.
The single rulebook, among other things:
- lays down capital requirements for banks
- ensures better protection for depositors
- regulates the prevention and management of bank failures
The pillars of the single rulebook - the legal acts that are most relevant for the banking union - are:
- capital requirements directive IV (CRD IV) and capital requirements regulation (CRR)
- amended directive on deposit guarantee schemes (DGS)
- bank recovery and resolution directive (BRRD)
Capital requirements for the banking sector
The EU rules on capital requirements for banks and investment firms are designed to improve the EU banking sector's ability to withstand economic shocks, improve its risk management and ensure normal lending activities during economic downturns.
These rules also implement the Basel III agreement - the internationally agreed bank capital adequacy standards - in EU legislation.
Deposit guarantee schemes
With the creation of the banking union the existing EU rules on depositor protection have been improved to provide equal level of protection across the EU and to prevent panic withdrawals in cases in which a bank becomes unviable. This was necessary for the overall financial stability in the single market.
Bank recovery and resolution
The EU rules for bank recovery and resolution regulate the prevention of bank crises. They ensure the orderly resolution of failing banks, while minimising their impact on the real economy and on public finances.
These rules, among other things, established the bail-in mechanism and resolution funds. These help ensure better protection of taxpayers money in cases of bank failures.
Why a single rulebook?
In June 2009, the European Council recommended a single rulebook approach to eliminate legislative differences among member states, ensure the same level of protection for consumers and a level playing field for banks across the EU.
At the same time, it is a step towards completing the single market in financial services.