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EU legislation

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The instruments available to European legislators are directives and regulations. An EU regulation is binding in its entirety and directly applicable in all member states. A directive, on the other hand, is binding for member states only as to the result to be achieved, which means that it has to be transposed into national law.

European legislation often has its roots in the recommendations of the Basel Committee. For example, Basel III was implemented at the EU level by way of the "CRD IV package" (comprising the Capital Requirements Regulation, or CRR, and the Capital Requirements Directive, or CRD IV).

Capital Requirements Regulation - CRR

The CRR is primarily addressed to supervised institutions and is directly applicable law in Germany. It chiefly contains the quantitative requirements for banks, such as the rules on capital adequacy, on large exposure limits and on liquidity levels.

Capital Requirements Direcitive IV - CRD IV

CRD IV is addressed mainly to the member states. Amongst other things, it contains rules on the authorisation and supervision of credit institutions and investment firms, requirements for risk management, and possible sanctions when breaches occur. The CRD IV requirements have been transposed by way of the German Banking Act (Kreditwesengesetz).