However, small institutions have no such instruments, which means they must go to great lengths to create such instruments in the first place. I think this approach is going too far and suggest amending it under this year’s CRD IV review. Small institutions should be exempted from the specific prudential requirements. What burdens are complicated rules imposing on smaller institutions?
One of the most problematical areas lies in the human resource requirements and costs created by the need to regularly review whether the rules are actually being fully complied with. This means that the problem is not so much the minimum capital or liquidity requirements but instead the high operational burden imposed by implementing these rules and following them.