Economic impact of the Final Basel III output floor

The Final Basel III Framework introduces the concept of an output floor, which impacts the minimum level of capital banks are required to hold for each type of asset. In this context, the European Commission has put forward two main options for implementing the output floor: 1) the single stack approach, which is the preferred approach by the European Banking Authority (EBA), and 2) the parallel stack approach, which is preferred by several member states, including Denmark, Germany and France.

On this basis, the Swedish Bankers’ Association has asked Copenhagen Economics to analyse the impact of the different options on the Swedish banking sector and the real-economy. 

We find that:

We conclude that imposing fixed global international standards on banks with highly different structures can reduce economic welfare. Hence, Sweden, as well as the EU, would be best served with an implementation that reflects this variation hereby adhering to the original aim of the Basel proposals.

The study is commissioned by the Swedish Bankers’ Association.



Related work

Swedish Private Equity and Venture Capital Association (SVCA) Economic footprint of Swedish venture capital
Swedish Bankers’ Association (Svenska Bankföreningen) Competition in the Swedish Banking Sector 2019
Swedish Bankers’ Association (Svenska Bankföreningen) How digitalisation is changing the competitive dynamics in banking
Swedish Bankers’ Association (Svenska Bankföreningen) Impact of the final Basel III framework in Sweden
Swedish Private Equity and Venture Capital Association (SVCA) Economic Footprint of Swedish Private Equity