BASEL, Switzerland (MNI) – Financial markets appear to have warmly
received the new minimum capital requirements for banks, Financial
Stability Board chairman Mario Draghi said Monday.
The Basel III accord reached Sunday will create “a much stronger
banking and financial system, much more resilient to crisis,” the
European Central Bank Governing Council member told reporters here. “I
can only welcome very warmly the agreement.”
“I think the agreement was welcomed by the markets,” he said. “But
you never know with markets.”
Nevertheless, the initial reaction appears favorable and could
perhaps mean that markets “found the agreement a strong agreement which,
in making the system more resilient, will make the recovery more
sustained,” he said.
The assessment of the macro-economic impact of the new requirements
“is at the basis of the transition arrangement and the phase-in
arrangement” that are part of the agreement, he said.
Although the agreement on capital standards “will certainly reduce
the probability of failure of systemically important financial
institutions,” according to Draghi, “it does not address the moral
hazard problem that stems from the fact that these institutions are
simply too big or too interconnected to fail.”
–Frankfurt bureau tel.: +49-69 720142. Email: dbarwick@marketnews.com
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