French President Emmanuel Macron called on Thursday for a revision of how Europe applies minimum capital rules to banks and insurers so that they are not too risk-averse and Europe is put at an economic disadvantage.
The Basel Committee of banking regulators from around the world is facing pushback from banks in the United States in particular on the final leg of Basel III post-financial crisis bank capital reforms to prevent bailouts of struggling lenders by taxpayers.
Meanwhile, EU rules known as Solvency II for insurers have long required them to hold billions of euros in extra capital in excess of minimum reserves, although an agreement was reached in December to ease them.
Global Basel Committee Bolsters Rules for Supervising Banks, Non-Bank Sector
“We need to revise how Basel and Solvency are applied. We cannot be the only economic zone in the world that applies them,” Macron said in a speech on the European Union at Paris’ Sorbonne University.
“I am not in favor of removing everything, I don’t want to return to a culture of financial recklessness. I just want us to put some risk culture back in the way we manage savings,” Macron added.
French officials have long complained that US banks are not applying the Basel III rules, putting their European rivals at a competitive disadvantage.
They have also said that Solvency II was requiring European insurers to be too conservative with capital and discouraging equity investments sorely needed to boost firms’ balance sheets.
Macron said easing capital rules should be one of the pillars of creating a new model for growth in Europe along with better integration of EU capital markets and the creation of a pan-European savings product.
(Reporting by Leigh Thomas; editing by Sharon Singleton)
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