The Capital Requirements Regulation III (CRR3) is a legally binding EU regulation that governs how banks calculate their capital requirements, leverage ratios, and market risk exposure. CRR3 aims to fully implement Basel IV within the EU, reducing regulatory fragmentation and ensuring a consistent supervisory framework across member states.
The regulation mandates stricter capital definitions, enhancing financial stability by requiring banks to hold higher-quality capital buffers. It also strengthens supervisory stress testing, improving risk sensitivity for institutions exposed to credit, market, and operational risks.
