Pursuant to the Capital Requirement Regulation (CRR) of the EU, a capital instrument has to fulfil several conditions so that a credit institution can count it as a component in its own funds. Most of the conditions listed in the CRR are clear and well-defined, therefore their observance is easy to control. However, some conditions are not so unambiguous, e.g. the prohibition on incentive to redeem is particularly difficult to interpret. The condition above also appears among the requirements of Additional Tier 1 capital, Tier 2 capital and eligible liabilities. This study aims to present the economic logic of the prohibition on incentive to redeem, how the fulfilment of this condition can be checked and how regulatory authorities interpreted the fulfilment of the conditions regarding the prohibition on incentive to redeem in specific cases.

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In December 2017, the Basel Committee on Banking Supervision amended several points of its Basel III guidelines published earlier. The amended version was published under the name Basel III finalization. The amendments limit the internal model based capital requirement calculation methods, make credit and market risk methods more risk-sensitive, standardise the calculation methods of the operational risk capital requirement and raise the leverage ratio requirement for Global Systemically Important Institutions (G-SIIs). The European Banking Authority examined how the aforementioned amendments would affect European banks and put forward suggestions as to how these amendments should be transposed into EU law. Taking into account these data and recommendations, the European Commission is to start drawing up its proposals on the amendment of EU laws, primarily the CRD and the CRR.

Bank regulation in Hungary has undergone massive changes in the past 30 years. It has taken several crises, and the lessons learned from these, for today's far-reaching system of rules governing the smallest details of bank operation and risks to emerge. Th is paper sets out to describe the historical frameworks for this. In 1989, when the Hungarian Banking Association was founded, bank regulation in Hungary was still somewhat basic and rudimentary. Th e 1991 Financial Institutions Act brought about substantial changes to this situation. To some extent, even at this early stage the Pit. refl ected the globally applied rules adopted from the recommendations of the Basel Committee and the European Union directives. Eff orts to achieve European legal harmonisation already played an increasingly prominent role in domestic bank regulation prior to Hungary's EU accession in 2004. Today, however, the operation of banks is profoundly aff ected not only by EU regulations, but by the increasingly rapidly evolving and expanding supervisory methodology. Alongside the common EU rules, however, there is also scope for rule-making at national level, and Hungary actively makes use of this opportunity.JEL codes: G21, K22, L51, N24, O16