Brussels, 28/04/2015 (Agence Europe) - The European Commission will not be making a legislative proposal obliging European banks to hold capital in order to offset the risks they take when they invest in government bonds.
“The capital requirements for government bonds are now being discussed in many places - in the Basel Committee as well as in the committee for systemic risks at the European Central Bank”, the Commissioner for Financial Services, Jonathan Hill, said in an interview published by the German daily newspaper Handelsblatt on Tuesday 28 April. Stressing that he understands the arguments of those who advocate capital requirements in order to guarantee investments in government bonds, the Commissioner nonetheless feels that “we can only solve this problem at a global level”. “The EU cannot afford to go it alone on this issue”, he added.
In early April, the president of the single supervisory committee within the ECB, Danièle Nouy, raised this issue, arguing the need to recognise, from a regulatory point of view, that the sovereign debt risk cannot be seen as absolutely zero (see EUROPE 11287). The sovereign debt crisis in the eurozone, which forced Greece, Ireland, Portugal and, to a lesser extent, Spain to call for financial assistance in order to avoid payment default, supports this view. (Mathieu Bion)