The National Assembly on Thursday unanimously passed the new banking act, which introduces stricter and more complex mechanisms for capital adequacy in line with what is known as the Basel II standards.
Basel II sets less stringent criteria for capital adequacy for credit risk but determines additional capital adequacy requirements for operational risk.
The new system lowers capital adequacy requirements for all banks, but it requires from bigger banking systems that they use more sophisticated models for the valuation of market risks, Katja Bozic, the head of the Finance Ministry's directorate for the financial system, said as she unveiled the act in early October.
This will facilitate the operations of small and medium-sized banks as well as mortgages, she said, adding that an analysis carried out in 40 countries had shown that capital requirements for smaller banks will be reduced.
Meanwhile, bigger cross-border banking groups will have to use advanced valuation models.
The Basel II standards also upgrade the supervision between the supervisors in the country of the head office and the countries of the subsidiaries, giving special powers to the supervisor in the country of the head office in certain cases.
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