General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
February 09, 2018

Andreas Dombret of Deutsche Bundesbank spoke at the London School of Economics and Political Science in London. He discussed the global economic integration and the future of international cooperation. He stated that he will apply an approach of less comprehensive globalization and greater national diversity to the three current policy challenges: the regulation of global trade, the regulation of global finance, and the future relationship between the UK and the EU.

Dr. Dombret stated that globalization is both good and bad. Global economic integration has contributed to greater prosperity in many countries. However, the development of Brexit is a reminder that globalization has a darker side and that global economic integration of the last 40 years has contributed to two significant problems. First, importing and exporting lead to sectoral change and redistribution, which produces both winners and losers in a society. The second problem of globalization is that the global regulatory harmonization weakens the ability of states to sustain welfare standards and regulations that are above global minimum standards. He discussed that the limitations of globalization must be accepted and a stronger set of rules must be devised to limit the negative repercussions of free markets. To this end, he emphasized on three policy elements:

  • First, countries must decide the level of compensation they want to provide to those who lose out from globalization.
  • Second, each society must  reconsider the cases in which certain limits to global markets would make sense.
  • Third, policy element of the future globalization framework is continued—but less, and focused—harmonization; harmonization efforts should be focused on certain meaningful and legitimate minimum standards.

He explained focused harmonization by applying the principles in three crucial policy areas—trade, finance, and Brexit. With regard to global finance and regulatory harmonization, he mentioned, "...Basel III standard is for internationally active banks. As such, jurisdictions are free to apply a different set of rules to smaller, only nationally active banks that pose no threat to international financial stability. Most nations already have less restrictive rules on smaller banks in order to reduce the operational burden for them. I am a strong proponent of extending this proportionality further, because the highly complex regulatory reforms after the financial crisis were sought for global banks, and they overburden smaller, regional banks. In sum, then, we ought to focus on truly global aspects, like regulating globally active banks, while leaving it to nation states to carry out those tasks that they are better placed to take care of, such as the regulation of locally active banks." With regard to Brexit, he explained that in the event of no free trade agreement if service providers have to apply for full licenses in both jurisdictions and have all the necessary elements of a fully functioning bank ready in both places, transaction costs can increase for some. However, it may also bring the benefit of enabling the EU and the UK to set their own rules in an important area of economic policy. He concluded that finding a middle way that harnesses the benefits of globalization and limits its negative repercussions is necessary.

 

Related Link: Speech

Keywords: International, Banking, Regulatory Harmonization, Brexit, Basel III, Proportionality, Bundesbank, BIS

Related Insights
News

EBA Single Rulebook Q&A: Third Update for February 2019

EBA published answers to two questions under the Single Rulebook question and answer (Q&A) updates for this week.

February 15, 2019 WebPage Regulatory News
News

FSB Report Examines Financial Stability Implications of Fintech

FSB published a report that assesses fintech-related market developments and their potential implications for financial stability.

February 14, 2019 WebPage Regulatory News
News

US Agencies Amend Regulatory Capital Rule to Allow Phase-In for CECL

US Agencies (FDIC, FED, and OCC) adopted the final rule to address changes to credit loss accounting under the U.S. generally accepted accounting principles; this includes banking organizations’ implementation of the current expected credit losses (CECL) methodology.

February 14, 2019 WebPage Regulatory News
News

FED Issues Correction in Historical Dataset in its 2019 Stress Tests

FED identified an error in the historical dataset used in its 2019 stress tests and issued a correction.

February 13, 2019 WebPage Regulatory News
News

OCC Consults on Company-Run Stress Test Requirements for Banks

OCC proposed amendments to its company-run stress testing requirements for national banks and Federal savings associations, consistent with section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

February 12, 2019 WebPage Regulatory News
News

CFTC Extends Comment Periods for Trade Execution Requirement Proposals

CFTC announced that it is extending comment period for the proposed amendments related to the regulations on swap execution facilities (SEF) and trade execution requirement.

February 12, 2019 WebPage Regulatory News
News

BCBS Updates Instructions for Basel III Monitoring Exercise

BCBS updated instructions for Basel III monitoring for the collection of December 2018 data from the participating banks.

February 12, 2019 WebPage Regulatory News
News

OCC Proposes to Renew Information Collection Under Stress Test Rule

OCC is proposing to renew its information collection titled “Annual Stress Test Rule” (OMB Control No: 1557-0311). Comments must be received on or before March 13, 2019.

February 11, 2019 WebPage Regulatory News
News

OSFI Consults on NSFR Disclosure Requirements for D-SIBs

OSFI proposed the draft guideline on the net stable funding ratio (NSFR) disclosure requirements for domestic systemically important banks (D-SIBs).

February 11, 2019 WebPage Regulatory News
News

EC Amends Its Regulation to Clarify Impairment Requirements for IFRS 9

EC published the EU Regulation 2019/237 that amends Regulation (EC) No 1126/2008 adopting certain international accounting standards, in accordance with Regulation (EC) No 1606/2002 regarding International Accounting Standard (IAS) 28 on Investments in Associates and Joint Ventures.

February 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2601