15 June 2009

ECB Tumpel-Gugerell outlines necessary ‘regulatory repair’

Regulatory gaps for systemically important hedge funds, credit rating agencies and OTC derivatives markets need to be closed. In particular the supervision of systemically important cross-border institutions has to be strengthened.

"The current crisis created a window of opportunity for change and reform", Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECB said. "The ECB stands ready to take up its part on macro-prudential supervision", she reiterated.

 

"We need to undergo global regulatory and supervisory repair by strengthening the Basel II capital framework and mitigating pro-cyclicality stemming from the regulatory frameworks", she said. "Also, regulatory gaps need to be closed including for systemically important hedge funds, credit rating agencies and OTC derivatives markets. Finally, macro-prudential supervision has to be strengthened, in particular the global monitoring of systemic stability and the supervision of systemically important cross-border institutions".

 

“At the European level, the proposal of the De Larosière group to establish a European Systemic Risk Council should substantially improve the assessment of risks to financial stability at the EU level”, she said and called for three requirements that must be fulfilled, which are:

 

Ø      the ECB must have timely access to the relevant information, including information concerning individual institutions.

Ø       risk warnings from the new Council should be translated into effective policy action.

Ø       for the new Council to be independent and effective in its decision-making, it is essential that it have a solid institutional and legal basis.

 

Full speech

 

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