The current Basel I regulatory capital rules are increasingly inadequate for large, internationally active banks that offer ever more complex and sophisticated products and services in an extremely competitive environment. The flaws of the existing Basel I rule for large, complex U.S. banks are fairly well-known. The simple risk-bucketing approach in the existing Basel I rule, for example, creates perverse incentives for risk-taking.
Furthermore, Lietuvos bankas, in its 2020 study on convergence, estimated that Lithuania would have needed a TFP of more than 30% higher over the past 20 years to catch up with the TFP levels of the original EU member states of Germany, France, or Belgium, who belong to a club of their own.