International

French President Calls For EU Banking And Lending Reform

Reuters reported Tuesday that French President Emmanuel Macron may seek to change the enforcement of some banking rules across Europe.  The goal of changing the way the rules are carried out, spanning the banking and insurance industries, would be to boost lending activity.

Macron said at a town hall meeting held in his home country that “we have very strict rules with the result that banks lend less and less to small and medium sized companies,” according to the newswire.

The rules that are in place are ones mandated by the Basel Committee, when it comes to banking.  Firms within the insurance sphere are governed by what is knowns as the Solvency II regime, and capital rules mean that firms must set aside money to defend against losses if clients in turn go “bust,” as Reuters described it.

Said Macron, “we could modulate these rules for banks and insurance companies depending on the reality of the country and the economic cycle and that, when an economy recovers, we could guide banks’ targets — and that could be done by finance ministers and not only accounting and technical rules.”

Reuters stated the changes in those aforementioned rules might thus be unclear.

As noted earlier last week, and also via Reuters, the Association for Financial Markets (AFME) in Europe has stated that regulators should curb aggressive bank regulation.

The group has said regulation is making it more difficult for banks in Europe to support the broader economy in the wake of the financial crisis, particularly as a result of capital requirements.  Analysis shows the annual cost of regulation is $37 billion for 13 banks combined, amounting to 39 percent of total capital markets expenses in 2016.

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