The European Union reached a tentative deal Tuesday on toughening up capital rules for banks to help prevent a repeat of the taxpayer-funded bailouts that followed the 2008 financial crisis.

EU member states agreed with the European Parliament on how to implement long-awaited global standards known as Basel III as part of a wider package of reforms that also touch on cryptoassets and sustainability risks.

Europe and the US are seeking to finish the complex and controversial set of policies to shore up the financial strength of banks after excessive risk taking almost broke the global economy. Yet as memories of the credit crunch fade, Europe has sought to water down its version of the rules for fear of choking off the flow of money to companies that depend more on loans than in the US.

The deal still needs to be formally approved by member states and the parliament, the European Council said in a statement. It’s an important milestone five years after regulators gathered at the Basel Committee on Banking Supervision agreed on the sweeping set of capital rules.

The heart of the effort to finalise Basel III is the so-called output floor, which limits the degree to which banks can use their own calculations to quantify the risks they face. Regulators argued that banks had an incentive to game the system in order to maximize the amount of capital they can pay out to shareholders via dividends and stock buybacks.

The agreement includes “appropriate transitional arrangements to allow sufficient time for market players to adapt,” according to the statement.

Other parts of the package include improvements related to credit, market and operational risks; additional efforts to make the rules proportional for “small and non-complex institutions”; a common framework for ensuring that bank executives and other key officials are fit for their roles; and a minimum cooling off period for regulators before they can join supervised firms. The package also includes a transitional prudential regime for cryptoassets, amendments to enhance banks’ management of Environmental, Social and Governance (ESG) risks, and common minimum requirements for branches of banks from outside the EU and the supervision of their activities in the bloc - Bloomberg L.P.