FINANCIAL MARKETS face more stormy times and policymakers should use them as an opportunity to reform oversight of banks and their capital rules, the European Union’s market regulator said yesterday.
“Never again will the political climate be so favourable for making a meaningful step forward,” EU internal market commissioner Charlie McCreevy told a financial markets conference.
Banking supervision needs shaking up as cross-border groups made up 80 per cent of EU deposits, the former minister for finance said, adding global rules on bank capital, known as Basel II, needed fundamental reform.
Member states and national regulators should put aside vested interests and support moves to more streamlined pan-EU financial supervision, he said.
Executive remuneration in the financial sector is also a target amid public outcry over bonuses for top bankers.
“Measures that focus on addressing perverse incentives are being considered,” Mr McCreevy said. Mandatory rules were unlikely, he added.
“It’s a very vexed question. I don’t possibly see a legislative proposal. Perhaps we could agree some broadly based principles, not only in Europe but globally as well,” Mr McCreevy said.
Mr McCreevy repeated he would “prepare appropriate regulatory initiatives” for hedge funds and private equity once public consultations are completed.
He confirmed a provision would be inserted into EU financial regulation now being amended so that clearing of off-exchange traded credit derivatives is mandatory to cut risk in the sector. – (Reuters)
