VIENNA (MNI) – New Basel III rules should lead to deleveraging,
possibly giving capital markets a bigger role in Europe, European
Central Bank Governing Council member Ewald Nowotny said on Friday.
Nowotny said that “what can be expected is a certain deleveraging.
That means also that the European banking system might become a bit more
like the Anglo-Saxon banking system with financing via capital markets
becoming more important.”
At the same time, the role of deposits will become increasingly
important because a lot of wholesale financing will decrease, the head
of the Austrian National Bank argued.
Nowotny said that the ECB’s General Council earlier this week had
discussed structural changes of the banking system and that the
discussions reflected expectations of a more stable but less dynamic
banking sector.
He also noted that Basel III rules will curtail the shadow banking
system by making it more difficult to finance it.
The key provision of the Basel III agreement unveiled last Sunday
is an increase in the required tier 1 (ie, common equity) capital ratio
to 7%, more then triple the current level of 2%.
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