The European Union may alter proposed global bank liquidity and capital rules if they threaten the economic recovery in the region, said Michel Barnier, the EU’s financial services chief.
Barnier is in charge of the 27-nation EU’s implementation of an overhaul of bank regulation drawn up by the Basel Committee on Banking Supervision. Lenders and some governments have urged him to modify or drop aspects of the reforms, which they say will harm banks’ ability to lend.
“We shall carefully adjust the measures in that agreement” when implementing them in the EU, Barnier said at a banking conference in Brussels today. EU regulators won’t take steps that “hinder economic recovery,” he said.
The Group of 20 nations decided to bolster banks’ liquidity and capital to prevent a repeat of the worst financial crisis since the Great Depression. G-20 leaders last month endorsed rules, known as Basel III, which will more than triple the highest-quality capital, such as shareholders’ equity, that banks must hold to cushion against losses. G-20 leaders committed in a statement to “implement fully the new bank capital and liquidity standards.”
Further elements of the rules were agreed upon yesterday by the Basel committee.
Implementation of the reforms must take into account “European banking specificities,” Othmar Karas, an EU lawmaker who guides work on Basel III in the European Parliament, said at the same conference.
Aspects of Basel III that should be reexamined include its “one size fits all approach” to banks, and its plans to impose minimum liquidity standards on lenders, said Karas.
“We are in favor of introducing liquidity ratios at group level, but the question arises whether such a rule makes sense for all groups,” Karas said.
Regulators “should be careful” in how they “translate Basel III into EU regulation,” said Jordi Gual, chief economist at La Caixa bank. National authorities should retain powers to take into account local specificities, he said.
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