Association of German Banks: EU and US need to coordinate financial market regulation more closely

15 December 2010 – The Transatlantic Economic Council (TEC) meets in Washington, D.C. on 17 December. The main task of the TEC, which was set up in 2007, is further integration of the EU and US markets, particularly through adjustment and recognition of existing standards and joint development of new standards.

“It is vital particularly for banks operating across borders that regulatory proposals are coordinated internationally. It is not a question here of identical rules but of mutual recognition of comparable home-country rules. Given the difficulty of this task, the world’s two largest economic areas should lead the way in step with each other”, said Bernd Brabänder, Head of International Relations, EU Policy and Economic Affairs at the Association of German Banks.

Despite the important role played by the G20 in general as a central discussion forum for the new financial architecture, the TEC should also make a commitment to close coordination of the new rules and discuss the reforms proposed in the EU and the US from this angle. This opportunity should not be passed up.

“There is no point in discriminating against branches or subsidiaries of banks from either side of the Atlantic or subjecting them to contradictory requirements. If the US, the EU and other countries manage to develop better rules that are in line with international guiding principles and neither distort competition nor impose unnecessary double burdens on international market participants, then we will have drawn the best possible lesson from the crisis”,
Mr Brabänder added.

The TEC should resume the joint efforts to achieve integrated financial markets. This target had been lost sight of due to the crisis. But especially now it was important, on the one hand, to create a mutual understanding of legislative necessities and, on the other hand, to address open issues that each side’s reform packages raised for the other – for example, different approaches on regulation of credit rating agencies and hedge funds, bank levies and accounting rules.

“Just as important is an understanding on a common trade policy strategy. Completion of the WTO’s Doha Round is overdue. This would send the best signal against the creeping protectionism in the wake of the crisis, strengthen the multilateral world trade order and at the same time stimulate growth globally.”


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