–ECB Weber: Need Balance Between Financial Reform, Econ Growth
–ECB Ordonez: Must Reduce Pro-Cyclicality Of Financial System

MADRID (MNI) – France and Germany will actively seek agreement on
a systemic risk levy, French Finance Minister Christine Lagarde has
said.

The comments were made in the Eurofi newsletter published today
in Madrid ahead of the informal ECOFIN meeting here this weekend.

“Both France and Germany support the idea of introducing a levy
differentiating systemic risks based on international principles, with
the intention to reduce the risk profile that some financial
institutions exhibit for the financial system as a whole”.

“We will actively push for the introduction of such a systemic risk
levy, which must be risk based and should aim at an international level
playing field,” the minister stated.

Lagarde also said France supported the introduction of financial
sector crisis resolution regimes in all countries on the basis of the
initiative from the European Commission and the recommendations made
by the Basel Committee

In the same publication, Bank of Spain Governor and ECB Governing
Council Member Miguel Ordonez said one of the lessons of the “crisis is
the need to reduce the pro-cyclicality of the financial system.”

“It is necessary we ensure in practice that the minimum capital
requirements are not excessively cyclical. Counter-cyclical capital
buffers, built in good times and used in bad times, may help for this
purpose”.

“It is really important to be more proactive on this issue,”
Ordonez said, and he also stressed the need for international
coordination on this issue.

Bundesbank President and ECB Council Member Axel Weber also
appeared in the publication, saying that it was important to find a
balance between financial sector reforms and the costs of that for
economic growth.

“The positive effect of these requirements may, however, be
counterbalanced by costs, e.g. in terms of a reduction of intermediation
services … which, in turn, may impede economic growth”.

“Hence, we have to find a balance between increasing financial
stability and foregone economic growth opportunities. In this regard,
the current comprehensive quantitative impact study of the BCBS (Basel
Committee on Banking Supervision), which is going to analyse the impact
of the proposed regulatory measures in a bottom-up exercise, will play a
key role”.

–London newsroom: 0044-207-862-7499: email: echarlto@marketnews.com

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