Brussels, 01/10/2010 (Agence Europe) Meeting informally in Brussels, EU finance ministers and national central bankers discussed the recent decisions by the Basel Committee to change the bank solvency ratios between now and 2019 (see EUROPE 10213). Belgium's finance minister, Didier Reynders, said on Thursday 20 September 2010 that it was difficult to go any further in terms of bank capital recruitments. The president of the European Central Bank, Jean-Claude Trichet, described the Basel Committee's decisions (made by the regulators of 27 countries) as a breakthrough. He said there was a huge difference between the new Basel III rules and the old Basel II rules incorporated in current EU legislation. He said the rules struck the right balance between making the banking system more resilient and ensuring the funding for the real economy.
A memorandum written by the Belgian Presidency of the EU Council of Ministers welcomes the Basel Committee's agreement and hopes it will be endorsed by the G20 summit in Seoul, South Korea, in November. The memorandum says that whatever happens, the agreement must be implemented in the EU, taking account of the differences between the various member states and the results of the EU impact assessment. In order not to penalise European banks, the Basel III rules must be applied at international level, explains the document, adding that failure to get the rules agreed to outside the EU would lead to an uneven playing field, which would not be acceptable in the long-term. The EU's fingers have been burnt by the fact that the United States is not applying the Basel II rules. The Belgian Presidency stresses, however, that with the endorsement of the Basel III rules, the expected changes in the structure of the financial system includes the danger of a new shadow banking system emerging that would lead to a huge transfer of risk outside the regulated system. It believes that the transition period for introducing the Basel III rules is “satisfactory”.
The ECOFIN Council provided an opportunity to compare notes on the financial reform process underway in Europe and the United States, comparing and contrasting the various initiatives on either side of the Atlantic. The ministers examined progress on derivatives, ratings agencies and accounting rules in particular. EU Internal Market Commissioner Michel Barnier said that in fact progress was being made in parallel despite different methods beings used (the US has a single law coving all the financial system while the EU is taking different moves in different sections of the industry). A Commission memorandum on financial ratings agencies, however, points out regulatory differences between the EU and the US (see EUROPE 10226). Barnier announced that new draft legislation would be unveiled in the first quarter of next year at the latest. The chair of the US CFTC, Gary Gensler, and Barnier pledged earlier this week to work over and above borders to reach the G20 targets on new rules for derivatives. (M.B./transl.fl)