Featured Product

    Andreas Dombret of Bundesbank Examines Future of US-EU Relations

    March 08, 2018

    Dr. Andreas Dombret of Bundesbank spoke at the Institute of International Bankers, Annual Washington Conference, Washington DC on March 05, 2018. He shared his perspective on the future of U.S.-EU financial relations, following the finalization of Basel III. In context of the U.S.-EU financial relations, Dr. Dombret highlighted that tension between the global and national levels creates political uncertainty.

    He said that “Bankers are asking how much of Basel III will be implemented in their jurisdictions and wondering about the individual paths that some countries will take.” He also outlined developments in three crucial areas of future cooperation: the breadth and depth of financial globalization and cross-border banking, global regulatory standards, and supervisory cooperation. Talking about the limits of global regulatory standards, he said that “Only if both the United States and the European Union keep their word and implement Basel III faithfully—and in its entirety, which means including the Fundamental Review of the Trading Book—we will avoid regulatory conflict or arbitrage and be able to provide a reliable framework for international banks.” Basel III represents minimum standards for internationally active banks. Consequently, jurisdictions are free to apply a different set of rules to smaller, only nationally active banks that pose no threat to international financial stability. The majority of countries already have less restrictive rules in place for smaller banks to reduce the operational burden imposed on them. Dr. Dombret added that he is a strong proponent of extending this proportionality further, because the highly complex regulatory reforms introduced in the wake of the financial crisis were intended for global banks and overburden smaller, regional banks.

    With regard to supervisory cooperation, he said that an example for more divergence is likely to be higher demands for licensing foreign bank branches and subsidiaries. He referred to the discussion about introducing an EU intermediate holding company, or IHC, equivalent regime. EU has been debating a draft law proposing the establishment of what are referred to as intermediate parent undertakings, or IPUs. Similar to the U.S. IHCs, foreign banks would have to bring their EU operations under a single holding company. “This instrument is by no means intended to make market entry more difficult for foreign banks—and the Bundesbank will continue to advocate fair access for foreign banks." Trilateral cooperation—between U.S., UK, and EU authorities—will become crucial to get a full picture of what is going on at global banks. He concluded: “we should honor the commitment made in the context of finalizing Basel III while nevertheless accepting its limitations for non-international banks; and we should overcome our reservations about close supervisory coordination, as this will become more important in the future. The future of U.S.-EU financial relations will be more complicated. But this complication could prove beneficial—rather than leading us into an ice age, it could help our relationship mature.”

     

    Related Link: Speech

    Keywords: Europe, Americas, US, EU, UK, Banking, Proportionality, Cross Border Cooperation, Basel III Finalization, Regulatory Standards, Bundesbank, BIS

    Featured Experts
    Related Articles
    News

    PRA Consults on Implementation of Certain Provisions of CRD5

    PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).

    July 31, 2020 WebPage Regulatory News
    News

    EIOPA Report Identifies Key Financial Stability Risks for Insurers

    EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.

    July 30, 2020 WebPage Regulatory News
    News

    EBA Publishes Risk Dashboard for First Quarter of 2020

    EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.

    July 30, 2020 WebPage Regulatory News
    News

    EBA Issues Updates on Stress Test Exercise for Banks in EU

    EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.

    July 30, 2020 WebPage Regulatory News
    News

    PRA Proposes Guidance Related to Matching Adjustment under Solvency II

    PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.

    July 30, 2020 WebPage Regulatory News
    News

    MAS Issues Guidance on Dividend Distributions by Banks

    MAS published a statement guidance on dividend distribution by banks.

    July 30, 2020 WebPage Regulatory News
    News

    APRA Updates Guidance on Capital Management for Banks

    APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.

    July 29, 2020 WebPage Regulatory News
    News

    FSB Report Reviews Macro-Prudential Framework and Tools in Germany

    FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.

    July 29, 2020 WebPage Regulatory News
    News

    EBA Urges Firms to Finalize Preparations for End of Brexit Transition

    EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.

    July 29, 2020 WebPage Regulatory News
    News

    SRB on Operational Continuity in Resolution and FMI Contingency Plans

    SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.

    July 29, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5606