Brussels, 24/02/2012 (Agence Europe) -Commissioner for the Internal Market Michel Barnier has repeated his concern about the potential impact on European banks of the application of the American Volcker rule. “I do not question the objective (…). But I do question the approach in terms of the application of the rule chosen by the US Congress and US financial regulators. It is not acceptable that US rules have such a wide effect on other nations and foreign capital markets without any international coordination”, he said on Thursday 23 February in Washington, at a speech to the American Chamber of Trade. He said that he had had a “constructive” discussion with Treasury Secretary Tim Geithner on the subject.
The Volcker rule, which bears the name of the former president of the Fed and was brought into the American financial reform known as the Dodd-Frank Act, will ban banks established in the United States from getting involved in risky activities in terms of speculation on own account as of July 2012. The EU fears competition distortions and the destabilisation of the debt market in the European countries to the benefit of the American Treasury, as only state bonds are subject to a derogation in the latest version of the text of the regulation.
Basel II&III. Praising the speed of European action to reinforce the banking prudential rules, Barnier said that he was on the other hand “concerned by the delays” in the implementation in the US of the Basel 2.5 rules, which increase capital requirements for positions held in the negotiation portfolio. These rules have already been applicable to 8,000 European banks since 1 January. The commissioner also expressed his hopes that Washington would quickly put forward its legislation aiming to integrate the so-called Basel III international agreement. The European Commission's proposal, which dates from summer 2011, is being negotiated at the European Parliament and Council (see EUROPE 10537).
Shadow banking. Barnier also said that he was in favour of action aiming to tighten up the framework for financial activities similar to banking activities, but which are not subject to the same regulatory obligations (shadow banking). In March, he will launch a specific public consultation on the basis of a document of which EUROPE has had sight (see EUROPE 10555). (MB/transl.fl)