PARIS (MNI) – Financial regulatory reform and supervision to
counter excessive risk-taking and procyclicality should balanced with
attention to limiting any negative fallout for the economy, European
Central Bank Governing Council member Christian Noyer said Tuesday.
“It will take many years to deal with the legacy” of the financial
crisis in terms of public debt levels and unemployment, the governor of
the Bank of France told a Europlace conference here.
There is still a need to “to move from a financial world of
excessive risk-taking and heavy regulatory arbitrage to a new system of
better quality capital and increased risk capture,” he said.
“A robust system needs strongly capitalized banks,” Noyer stressed,
arguing that the Basel III reforms would make “essential contributions”
in this regard.
Anticipating the concerns of bankers in the following round table,
he noted that the timetable for implementing the reforms had been
“specifically designed to be consistent with the economic recovery and,
more generally, to minimize potential adverse consequences on banks and
the macro-economy.”
Reforms “must be applied fully and consistently across
jurisdictions” in order to prevent a shift of financial intermediation
to the unregulated shadow banking sector, he emphasized.
New regulations should be flanked by “strong and efficient
supervision” to detect and prevent systemic risks, taking account of
nation cycles and individual risk levels, he said.
“Policy-makers are fully aware of possible macro consequences of
regulatory reforms and will be eager to limit the economic costs,” Noyer
assured. “Beyond broad effects on growth, it is also clear that the new
regulations should neither derail financial systems nor favor some
particular business models over others.”
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