This Practice Note introduces key concepts in the EU’s package of prudential measures, the Capital Requirements Directive IV (Directive 2013/36/EU) (CRD IV) and the Capital Requirements Regulation (EU) 575/2013 (EU CRR) (also known collectively as the CRD IV package or CRD IV), which implemented the global capital adequacy framework, Basel III, in the EU.

Background to CRD IV and EU CRR

Basel III is a global package of reforms which set out international standards of capital adequacy following the 2008 financial crisis. The G20 Declaration (the Declaration of 2 April 2009 on 'Strengthening the Financial System') called for internationally consistent efforts aimed at strengthening transparency, accountability and regulation by improving the quantity and quality of capital in the banking system. The declaration also called for the introduction of a supplementary non-risk based measure to contain the build-up of leverage in the banking system and the development of a framework for stronger liquidity buffers. In response to the G20, in December 2010, the Basel Committee on Banking Supervision (BCBS) published the final measures that are referred to as the