FRANKFURT (MNI) – Financial stress and weak economic activity are
no reason for countries to let up on financial regulatory reform,
Bundesbank Executive Board member Andreas Dombret said Thursday.
In a prepared text for a speech at a regulation conference in
Salzburg, Dombret called for more international cooperation and the
implementation of existing financial reforms, especially on mechanisms
for resolving even the largest cross-border financial institutions.
“Ongoing stress in the financial system and a weak economic
recovery in many countries is no excuse to weaken our commitment to
financial sector reform,” Dombret said.
“If there is a reproach to be made, it is that regulatory progress
has not been faster. The sovereign debt crisis, which is not least
driven by systemic problems in some countries’ banking systems,
underscores the urgent need to make the financial system more
resilient,” he said.
Dombret described solving “too-big-to-fail” as the “litmus test of
financial sector reform,” arguing the financial sector “can not and must
not be an exception” to market principles that allow for insolvent
firms to go bankrupt.
“Therefore, we have to find ways of resolving financial
institutions, however large, complex, interconnected or internationally
active, without causing systemic disruptions,” Dombret said.
Dombret said the “key attributes” for effective resolution regimes,
developed by the FSB and adopted by the G20, marked a “major step
forward,” but said there was still work to do in ensuring these
principles were implemented at national levels.
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —
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