Brussels, 24/10/2011 (Agence Europe) - On Thursday 20 October, EU Internal Market Commisioner Michel Barnier raised the option of considering separating off investment and retail banking to make the financial system less likely to collapse. He said last week, when unveiling the MiFID II draft legislation to changing the financial instruments markets (see EUROPE 10478), that he did not oppose the idea but the pros and cons would need to be properly assessed, particularly the potential negative impact on corporate economic efficiency. He added, however, that it was not the universal banking model that had caused problems during the 2008 financial crisis.
In the United Kingdom, the independent Vickers Committee on banking recommended last month that retail banking should be hived off from investment banking but not separated as such. The European Commission's official line is that extreme caution is required and that banks are extremely connected with one another in Europe, and something that affects one country could well impact on all the others as well. The Commission wonders whether it is realistic to believe that any unilateral action could provide security within the banking system. (MB/transl.fl)