Sir, Your editorial “Blocking the way to bank stability” (August 3), on the European Union’s proposed implementation of Basel III rules to strengthen banks’ capital, seems to be based more on speculation than a close reading of the text.

We are not watering down the definition of capital. The Basel criteria are included in our legislative proposal. We await similar action by other jurisdictions.

The so-called “flexibility” for countries to increase capital requirements above Basel levels is not a matter of interpretation. Our proposals make clear how member states can increase minimum capital requirements to cope with their own specific situations. This is not an option either: those who are faced with higher risks must act to mitigate them. The only thing a national regulator cannot do is to increase capital requirements across the board for all its banks without informing its peers in the EU of the macroeconomic or financial stability reasons for doing so. There is not one situation in which a national supervisor cannot take action and address all the specific risks in a particular bank or in several banks under its supervision.

The UK – and the FT – have championed a single EU market in financial services for many years. So has the European Commission. The leaders of all EU countries called in 2009 for a single rulebook so that banks could operate across borders without facing different rules in each country. That is the right way to restore financial stability and the competitiveness of the banking sector. The Commission believes it has struck the right balance between the single rule book and due consideration for specific national circumstances. It is now for the European parliament and the Council of Ministers to consider the proposals and legislate in the normal way.

Lax supervision by some of those now calling for more autonomy outside the EU framework contributed in no small measure to the financial crisis. If there is a power grab here, it is by people who want to take advantage of the crisis to undo Europe’s single market. They must not be allowed to succeed.

Jonathan Faull,

Director General, Internal Market and Services,

European Commission