Revisiting Banking Union in a Single Currency Area (Part 1)

Evidence suggests that financial integration in the Euro area is retrenching at a quicker pace than outside the union. Home bias persists. Meanwhile, governments continue to compete on their funding costs via interventions to support ‘their’ banks, avoiding spill over effects on costs of public debt but so distorting the level playing field with massive […]

Liikanen Out of the Blocks

Introduction On 29 January 2014, the EU Commission published a legislative proposal and accompanying press release regarding a regulation on structural reform of the EU banking sector.  Recognising that the Bank Recovery and Resolution Directive will be unable to address the issue of “too-big-to-fail” in its entirety, and in furtherance of the political agenda to […]

Finish the Job on Financial Regulation

By José Viñals: Brisbane and Basel may be 10,000 miles apart, but when it comes to financial regulation the two cities will be standing cheek by jowl. At the next summit of the Group of Twenty advanced and emerging economies, to be held in Brisbane in November, political leaders will take the pulse of the global […]

Are Banks About to Win on Commodities Trading After Their Success in Watering Down Basel III Capital Rules?

You know it’s bad when Bloomberg’s editors attack the banks’ win against regulators, in this case, their success in watering down already-too-generous Basel III capital requirements. And they look primed to score a twofer on pending rulemaking on trading in physical commodities. One of the hard-fought battles of Basel III was establishing limits on total […]

EBA Asset Encumbrance Rules Add to the Data Headache

Introduction On 30 October 2013, the European Banking Authority (EBA) published final implementing technical standards (ITS) on asset encumbrance reporting under Article 100 of the Capital Requirements Regulation (CRR).  The purpose of the ITS is to: create a standardised measure of asset encumbrance across institutions and in doing so provide authorities with insight into reliance […]

European Council Deals Blow to Single Resolution Mechanism

  The Single Resolution Mechanism (SRM) proposed by the EU Commission in July has suffered a fresh blow (see this blog for SRM background).  On 7 October 2013, an opinion from the European’s legal service sheds serious doubt on the legality of giving a new agency wide discretion to close troubled banks under EU treaties, potentially undermining […]

Margin Requirements for OTC Derivatives: Regulators Listen, but Do They Hear?

Introduction On 2 September 2013, the Basel Committee on Banking Supervision (“BCBS”) and the International Organization of Securities Commissions (“IOSCO”) published their long-awaited final policy document dealing with “Margin requirements for non-centrally cleared derivatives”. Scope Subject to certain exemptions discussed below, the final rules apply to financial firms and systemically important non-financial entities (“Covered Entities”) […]

Evidence of Hampered Monetary Policy Transmission Channel in the Euro Area

Mario Draghi cautioned on the ‘hampered’ transmission channel of monetary policy in his now famous London speech last week: To the extent that the size of these sovereign premia hampers the functioning of the monetary policy transmission channel, they come within our mandate. I referred to the clogging of rates policy back in April via […]