ECB official: Abandoning bank output floor "is not a good idea"

ECB Supervisory Board Chair Claudia Buch has publicly opposed the EU's proposal to weaken the so-called "output floor." The floor is intended to limit banks' ability to reduce capital requirements through internal models. Speaking at a conference in Vienna, Buch said: "I think it is not a good idea to step back from the agreed output floor." She added that the move cannot be reasonably justified, as some now argue that the floor will lead to capital increases "that we do not want to see." The proposal to revisit the output floor has been included in the EU's report on enhancing banking sector competitiveness. The EU has committed to putting forward legislative proposals in the first quarter of next year. The European Central Bank has previously supported the output floor.