Sabine Lautenschläger of ECB Dealing with a Globalized Banking Sector
Sabine Lautenschläger of ECB spoke at the George Washington University Law School in Washington D.C. about ways to deal with a globalized banking sector, reap the benefits, and keep the risks in check, as “that is the only way forward.” She also talked about further improving the current rules, with a focus on shadow banking.
She highlighted that the global nature of new rules in the banking sector have made the financial markets safer. Since “the banking sector is global, the standards need to be global too, to contribute to financial stability in the major financial centers. So I hope that the latest package of global banking standards—Basel III—will be completed this year. After finalizing Basel III, we need to focus on implementing the standards. I worry that some financial centers might not implement significant parts of the agreed framework. And that would be a great mistake. Without consistent implementation, the common standards will remain fragmented, leaving the door wide open to a race to the bottom in regulation, regulatory arbitrage, higher risks and future crises.”
With regard to improving the current rules, she mentioned that developments in the shadow banking sector merit close attention. Additionally, we must regularly assess whether the stated objectives have been fulfilled with the new set of rules. FSB is evaluating the recent reforms and this will indicate whether any unintended consequences exist and whether we need to adapt some of the rules—“although I do not expect a need for huge amendments,” said Ms. Lautenschläger. She concluded that “instead of building walls, we should come together to discuss how we can deal with a global banking sector …. Walking backwards will only lead us to where we came from: another global financial crisis.”
Related Link: Speech
Keywords: Europe, EU, Banking, Regulatory Reforms, Basel III, Implementation Monitoring, Shadow Banking, ECB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
HKMA Revises SPM Modules on Corporate Governance and Risk ManagementRelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
