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23 July 2015
Welcome to a new series of blogs on “Better Regulation”. In this and the following articles, we will explain what the new Commission initiative is about and what concerns it raises for citizens.
Guest bloggers Daniela Gabor and Jakob Vestergaard explain why they think Capital Markets Union, in its current form, is unlikely to advance its stated objectives and risks undermining other efforts to regulate (shadow) banking.
In May, European Commission Vice-President Timmermans presented his Better Regulation proposals, which aims to reduce the regulatory burden and improve the way new rules are made. One potentially worrying proposal is for more impact assessments at various stages of legislation.
26 June 2015
Financial industry lobbyists are using concerns about market liquidity to try and scare policymakers away from necessary reforms to bank structure and capital. This renewed focus on financial market liquidity risks confusing the symptom with the cause. If policymakers react in the wrong way to “liquidity lobbying”, they risk leaving us with more short term investing and a financial system that is more fragile and pro-cyclical than it needs to be.
10 June 2015
The European Commission is very confident about the level of support they claim for its Capital Markets Union project. But this support is not representative: the Commission’s event on 8 June mostly gave the floor to representatives of the finance industry, which will benefit from CMU, while civil society representatives with a different viewpoint were given very limited space.
In his new fascinating lesson from history, our guest blogger Fabien Hassan tries to explain the origins of the Monaco crisis in the early 1960s. He compares the treatment of tax havens by bigger countries before and after the globalisation of capital flows, and shows how tax havens were emancipated from their patron state.
Thomas Lines, a British consultant and former journalist and lecturer, says the mandatory separation of retail and ‘casino’ banking would improve financial stability by discouraging wholesale funding and bank interconnectedness. He argues that the EU and UK bank structure reforms should go further by encouraging banks to engage in more economically useful activities.
Iain Hardie and Huw Macartney present here the outcome of their research on the political process that led to the European proposal for a structural reform of banks, sheding light on the role played in particular by France and Germany in the process. As lecturers in International Relations at the University of Edinburgh and in Political Economy at the University of Birmingham respectively, they provide us with a political perspective on the debate and its possible outcome, and show how the defense of national champions has been predominant in the policy making process.
Our contribution from Italy by Andrea Baranes from the Finance Watch member organisation Fondazione Culturale Responsabilità Etica brings a view from a country that should have a strong interest in banking separation, yet politicians are reluctant to pursue the issue. The author describes the political standstill during Italy’s Council Presidency and argues that Italy’s failure to push the proposal during this period was a missed opportunity for Italy, which could only gain form banking structural reform.
German policy-makers have passed preemptive legislation on banking structure with the aim of influencing the direction in which the EU should go. Christian Ahlers from the consumer organisation “Verbraucherzentrale Bundesverband” (vzbv, a Finance Watch member) argues that the German reform is not well equipped to protect citizens and consumers. He warns that regulatory arbitrage and nationally fragmented supervisory approaches have in the past allowed the financial industry to bend existing rules, and this played a role in allowing the last crisis to happen.
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