Alors que la question de la stabilité financière des pays européens est toujours d’actualité, retour sur la proposition de la Commission européenne du 29 janvier 2014 concernant la réforme du secteur bancaire, dont nous attendons toujours l’entrée en vigueur.
On 29 January 2014, the European Commission proposed a reform of the EU banking sector that would prevent some banks from becoming ‘too-big-to-fail’ or at least, if already ‘too-big-to-fail’, from getting into risky businesses. This propositions develops both the goals that it aims to achieve and the means that would, according to it, permit to do so.
The proposed regulation, a quest for the end of financial crises
Two objectives are pointed out by Michel Barnier, Commissioner for internal market and services, regarding the proposition of the Commission : it should prevent some banks from becoming ‘too-big-to-fail, too-costly-to save, too-complex-to-resolve’ and in the meantime ‘strengthen financial stability and ensure taxpayers don’t end up paying for the mistakes of banks’. The fact is that even if the European Union and its Member States have already taken measures already in order to limit the impact of failing banks on the whole economy and society through laws on transparency, these regulations never dealt with the overwhelming size of some banks.
However, this constitutes the roots for a new financial crisis as the collapse of such banks could not be solved by a stronger financial institution since there is none. This is why, with the intent to consolidate the financial market, the present proposition requires from them that either they shut down their risky activities or they operate a structural separation of the risks associated with banks’ trading activities from its deposit-taking function.
The setting up of a safer financial market through the prohibition of high-risk trading activities for banks
In order to establish these solutions, the Commission mandated the Governor of the Bank of Finland, Erkki Liikanen, to chair the High Level Group and draft a report underlining the decisions to take. The resulting proposal, besides providing a common framework at EU level that should annihilate the possibility for banks to avoid their duties by making profit out of the differences between Member States regimes, put forward three measures to prohibit high-risk trading activities for banks. Firstly, it recommends the interdiction of proprietary trading through financial instruments and commodities as it carries out many risk for the society but only makes profit for banks. Secondly its application would allow, and sometimes constrain, supervisors to require the separation of potentially risky businesses of the banks from their ‘deposit-taking’ traditional activity. Lastly and as a complement to the second measure, the proposal provides rules to organize the direction of such dispersed banking groups with a high focus on transparency in order to prevent their members from avoiding their new duties. All of those proposed rules would thus put an end to the risky banking activities and hence enhance investors’ trust in the market.
As Michel Barnier stressed, ‘The proposals are carefully calibrated to ensure a delicate balance between financial stability and creating the right conditions for lending to the real economy, particularly important for competitiveness and growth.’