Capital Requirements Directive (CRD)

The Capital Requirements Directive (CRD) is a set of European Union regulations designed to ensure that banks have enough capital to cover financial risks and protect depositors. It sets minimum capital ratios, requiring banks to maintain a buffer of funds as a safeguard against losses. This helps promote stability in the financial system, ensuring banks can withstand economic downturns and reduce the likelihood of bank failures. The directive is an important part of the EU's efforts to create a safer banking environment and strengthen financial oversight.