The European Banking Authority ("EBA") has issued a press statement which summarises its contribution to the package that has been agreed at the EU level to restore confidence in the banking sector. The EBA’s contribution focuses on the capital and term funding needs in the EU banking sector against the backdrop of the increasing concerns regarding sovereign debt. The EBA has been asked to work with the European Commission, the European Central Bank and the European Investment Bank to explore how an EU coordinated approach can be put in place for the public guarantee schemes that should be set in place to support banks’ access to term funding at reasonable conditions. Given the sovereign debt crisis the EBA has designed a capital package which, while recognising the steps already taken to strengthen capital positions in the EU, aims to provide a further capital buffer for the EU banking system. Banks are required to strengthen their capital positions by building up a temporary capital buffer against sovereign debt exposures to reflect current market prices. In addition, banks are required to establish a buffer such that the Core Tier 1 capital ratio reaches 9%. Banks will be expected to build these buffers by the end of June 2012.