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26 July 2010

FBF state that financial reforms must take into account the G20’s growth target


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FBF is pleased with the G20’s objective of a more resilient financial system, but highlights the importance of the effects of the implementation timeframe of prudential standards, the risk in increasing the pro-cyclicality of accounting standards and the validation of bank taxes on growth targets.


Although the G20 has confirmed its objective of a more resilient financial system for stable economic growth, French banks believe some of the most important measures may in fact drag down growth. 
 
FBF notes that a new agreement on capital and liquidity is expected to be reached at the Seoul Summit in November 2010 which will approve that economic impact will be considered when calibrating measures and setting the implementation schedule. However, they suggest that the Basel Committee intention to implement the addition of a compulsory financial leverage ratio to Basel III should be reviewed or withdrawn, as it would lead to huge technical issues making European banks more restricted than other banks.
 
The quality of accounting standards is essential. The FBF regrets that the G20 has the target of just converging international standards. They point out that the concept of fair value should not be extended further among US and EU standardisers especially to retail banking activities as it could cause additional instability.
 
In the absence of a G20 agreement on a global bank tax, national characteristics must prevail. FBF highlights that French banks will need their capital now more than ever in the face of new regulatory requirements, if they are to continue lending for the promotion of growth and job creation.
 


© FBF - French Banking Federation

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