Villeroy: EU should rethink bank capital rules
European Central Bank (ECB) Governing Council Member Francois Villeroy de Galhau announced that the European Union should postpone and weaken new bank capital rules.
The European Union should delay or even weaken new bank capital rules, given that the United States is doing the same, European Central Bank (ECB) Governing Council Member and Bank of France Governor Francois Villeroy de Galhau said on Wednesday.
In a scenario where U.S. officials depart from the agreed rules or decide to implement them at a later date, Europe should “delay entry into force or even adjust certain provisions, especially those related to market risks,” Villeroy said.
In his speech, Villeroy said that US officials “reiterated their commitment to the full and faithful transposition” of the Basel rules at their meeting this month.
Global regulators agreed a few years ago on a package of measures known as Basel that would require many banks to increase the amount of capital they hold as a safety cushion to withstand potential crises.
But many banks worry that they could be at a disadvantage if they have to implement Basel rules more quickly or more stringently than others. This is partly because high capital requirements tend to reduce profitability by tying up resources.
Deutsche Bank AG Chief Executive Christian Sewing said last month that EU banks could be penalized if the US and UK take longer to implement the agreed package.