26 February 2013

銀行のトレーディング業務の分離を求めるリーカネン報告書の提言には基本的に賛成するが、その実施方法について注意を呼びかけるドイツ連邦銀行のドムブレット理事

In his view, the general thrust of the Liikanen Report – the idea that the universal banking system should essentially be retained, but the resolution of banks should be made simpler – is correct. However, the fact that this debate is being conducted with reference to Glass-Steagall-type banking systems would appear to be a critical point. Neither the Liikanen Group’s proposal nor similar concepts associated with Paul Volcker and Sir John Vickers target a true separation of banking activities of the kind introduced in the United States in the 1930s by means of the Glass-Steagall Act. It concerns, instead, the legal, financial and organisational separation of particularly risk-intensive types of activity – hereinafter referred to as “functional separation”.

In Mr Dombret's opinion, the report accurately describes the existing problems in the European universal banking system. He shares the findings resulting from the analyses in the three basic sections. The two detailed analytical sections on the development of the banking sector in the EU and the various business models provide a sound basis for the discussion of any structural reforms.

With its reform proposals in five separate areas, the Liikanen Group rightly adopts a holistic approach that explicitly builds on existing and/or future regulations. The central proposal that there be an obligation to separate trading has the potential to be a further useful element of the reform agenda, which should, overall, increase the stability of the financial system. In that regard, the Expert Group is right not to target the strict separation of banking activities – instead seeking, in principle, to retain the universal banking system, with the trading unit and the deposit-taking unit (albeit legally and financially separate) able to operate within the same holding company.

In principle, Dombret is sympathetic to the separation proposal made by the Liikanen Group. A functional separation can help to protect traditional banking operations – including payment transactions – conducted in deposit-taking credit institutions against risks stemming from speculative proprietary trading.

However, the separation proposal also has disadvantages and creates problems of its own. The activities that are to be separated must be clearly defined, as must any exceptions, in order to prevent the rules from being circumvented. The difficulties encountered with the regulatory implementation of the Volcker Rule in the United States are a warning in this regard. The Liikanen Group looked in detail at two options (termed “avenues”) as regards functional separation. He believes that both options are practicable, but the lower degree of intervention involved in Avenue 1 needs to be weighed, from a policy perspective, against the superior predictability of Avenue 2.

It is also questionable whether the stability benefits of functional separation are as large as the Liikanen Group assumes. As customers would continue to see one single financial group (ie from the customer’s perspective, the universal banking system would remain in place), there would – despite legal, financial and organisational separation – be reputational risks, with the result that financial difficulties in the trading unit could be expected to cause problems to spill over to the deposit-taking credit institution. Thus, while separating the relevant business areas could reduce the risk of contagion within the original institution, the significance of market-related contagion channels could increase if the trading unit were forced to pursue structurally less stable refinancing exclusively via the capital market. There is also a danger of business activities drifting into the shadow banking system.

All in all, we should be aware that functional separation is just one element of a whole bundle of measures necessary in order to ensure financial stability. It is vital that capital and liquidity levels are appropriate, and that credible resolution arrangements are put in place which not only include liability for creditors, but also make an involuntary exit from the market a realistic scenario and thus a credible threat. If banks’ recovery and resolution plans were generally unconvincing – i.e. if a mild variant did not achieve the desired objective – there would be an alternative ready in the form of mandatory functional separation for all banks. Supplementary measures in the field of corporate governance should round off the reform package.

However, before structural policy measures are taken, the costs of the proposals should be weighed against their benefits. First, the volume of the operations that are to be separated off should be ascertained. In particular, there are currently no data available on the volume of market-making operations. There would also be a need for further details regarding the functional separation before a final decision could be made.

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