BERLIN (MNI) – Making the global financial system more stable is an
indispensable precondition for sustainable economic growth, ECB
Governing Council member Axel Weber said Monday.
“The most important duty now is to create the fundamentals for
strong and sustainable economic growth,” the Bundesbank president
remarked in a draft for a speech to be delivered at the Euro Finance
Week conference in Frankfurt. “At the center is currently the reform of
financial market regulation.”
The new Basel III banking regulation will make banks “markedly more
stable,” Weber asserted. “I don’t assume that the new rules will hurt
the real economy noticeably,” he added, pointing to studies on the
matter by the Basel Committee.
Financial market regulation should not try to rule out completely
the failure of a bank, the central banker reaffirmed, arguing that this
would lead to a moral hazard problem.
Rather, there need to be rules implemented across the globe which
allow for an orderly liquidation of systemic banks in a crisis, without
hurting the rest of the financial sector, Weber said.
Moreover, the transparency of the shadow banking system has to be
increased, the ECB Governing Council member insisted. The shadow banking
system needs to be regulated in the same way as regular banks, he said.
“Similar activities should be subject to the same regulation regardless
of whoever carries them out,” he underlined.
Turning to the German banking sector, the Bundesbank president
criticized that the reorganization of the Landesbank sector is not yet
sufficient.
–Berlin bureau: +49-30-22 62 05 80; twidder@marketnews.com
[TOPICS: M$X$$$,M$G$$$,M$$EC$,MGX$$$,MFX$$$]
