Davos 2013: Heard in Davos

By Bloomberg Briefs - 2013-01-25T17:28:51Z

Photograph by Jock Fistick/Bloomberg

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Michel Barnier

On banking regulation:

He will present proposals this year for a "strong reform" of bank structure in a bid to prevent lenders from being too-big-to-fail. The EU plans will "separate well the risks in the banking sector." The proposals may be published by September. The "basis" of his work was a report presented last year by an EU mandated group led by Bank of Finland governor Erkki Liikanen. The group proposed that banks should be forced to shift some trading activities into separately capitalized units. "I am considering all options," Barnier said, adding that his team of EU officials is carrying out impact studies. Officials are also working on proposals for a "single resolution authority" that would handle bank failures in the 17-nation euro area. The plans will build on a draft law from last year that would force each nation to set up a bank-financed fund to pay for costs of restructuring and winding down failing banks. The planned single authority will draw on these national funds rather than be backed by a central pot of money, Barnier said. "It will work by using these national funds. I have not spoken of a European fund."