The CRD transposes into EU law the proposed Basel II accord, which is likely to be adopted by 100 countries around the world, starting in 2007. Since the June 2004 publication of the Basel II text, following six years of sometimes tough negotiations, Europe, the US and other countries have been engaged in incorporating the new rules into their own laws and regulations.
But, while this procedure is moving to a conclusion in Europe, the US rulemaking process has been derailed. At least one of the federal regulatory agencies in Washington believes fairly fundamental changes to the Basel II accord may be required. In Europe, regulators say that accommodating such demands is about to become virtually impossible.
JosÃ© MariÃ¡ RoldÃ¡n, head of banking regulation at the Bank of Spain, and chairman of the Committee of European Banking Supervisors, says: "I donât see how we can [make significant changes to the CRD after mid-July]." He does not entirely rule it out. But says it would be "very hard."
"The Europeans have a dilemma," says one close observer. "They are deeply reluctant to make any further changes to their new capital requirements law, but neither do they want to see the US walk away."