At a British Bankers' Association dinner in London, Barnier stressed that it is essential to restore confidence in financial markets. This requires, among other things, better supervision, well capitalized institutions and stronger risk management systems.
He presented his priorities as Commissioner for Internal Market and more details on financial services:
1. Well supervised institutions
A big problem in one country can rapidly spill over to others. If day to day supervision is to remain principally at the national level, we need:
A Single Rule Book, coupled with strong supervisory coordination and real information sharing. And trust between home and host; effective dispute settlement amongst supervisors; fit-for-purpose emergency and crisis management; prudentially sound, interconnected infrastructure (e.g. clearing and settlement, payment systems …); and a powerful macro-prudential early warning system.
We need to find the right political agreement. It will require flexibility from all sides. I will work hard for an ambitious, but realistic result. We must conclude by mid-year if the new authorities are to start work at the beginning of next year.
2. Well capitalised institutions
The G20 leaders agreed that our banks need more and better capital.
We are working with our partners in the Basel Committee to implement this.
The main issues are:
· getting more capital into the system and of better quality;
· proper capital levels for the trading book;
· liquidity standards;
· dealing with procyclicality;
· and
· possible leverage ratios.
3. Responsible institutions
Better corporate governance is essential. In particular we will need competent directors who have the ability to fulfil their function. Challenging the management and asking the right questions.
This is especially true for financial institutions where business models are among the most complex. We need strong risk management systems with independent risk committees.
Outside the boards, the right checks and balances will have to be in place. Shareholders have been too absent in the past.
He concluded by saying that “the EU has an important role to play. On the G20 roadmap in particular, we need to lead by example. But I do not want our firms to be victims of free riders in the G20 process. Strict implementation is the minimum we will expect from our partners. The credibility of our response to the crisis is at stake.”
© European Commission
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