Featured Product

    Andreas Dombret of Bundesbank Speaks on Global Economic Integration

    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

    Featured Experts
    Related Articles
    News

    MAS Concludes Blockchain Payments Prototype Shows Commercial Potential

    MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.

    July 13, 2020 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    APRA Updates Reporting Validation Rules in July 2020

    APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    July 10, 2020 WebPage Regulatory News
    News

    PRA to Partly Apply EBA Guidelines on Disclosures for COVID Measures

    PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.

    July 10, 2020 WebPage Regulatory News
    News

    EBA Updates List of Correlated Currencies Under CRR

    EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5469