As a result, the rules themselves have become extremely complex, especially with Basel III. While appropriate for the global players, the rules tend to overburden small institutions. The main problem is the compliance workload – that is, the effort associated with meeting the requirements as well as demonstrating that they’ve been met.
In Europe, we are currently busy fine-tuning our regulatory framework by providing some relief for small, low-risk institutions. Importantly, capital requirements will remain untouched. But we are aiming to reduce disclosure requirements, simplify reporting and exempt some institutions from recovery and resolution planning, among other things. Proportionality is one task for the near future.