However, with individual countries taking different approaches to the implementation of global standards, some of the early momentum towards ensuring commonality generated by the G20 during the height of the financial crisis has been lost.
In the past year, arguments have broken out between bank chiefs, politicians and regulators as to how rules – often set by global or regional bodies such as the Financial Stability Board, the Basel Committee on Banking Supervision or the European Banking Authority – should be implemented.
Chris Cummings, chief executive of TheCityUK, an independent membership body promoting the UK financial services industry, said: “A harmonious regulatory playing field is what business really wants and needs, as it allows business to focus on looking after their clients and generating returns for shareholders. In the aftermath of the financial crisis, the G20 agreed to proceed on a coordinated regulatory reform effort, but what we’ve seen since is regulation being repatriated at an alarming rate.”
Even within Europe, where all banks are subject to the rules, there is further room for divergence. Davide Taliente, head of Oliver Wyman’s public policy practice in Europe, Middle East and Africa, said: “For example, the battlelines on CRD IV have been pretty fierce and some local regulators have to an extent given up on that, believing that there will be sufficient room for manoeuvre in how they can choose to enforce the rules. There is a colossal difference in how each country calculates risk-weighted assets.”
Beyond capital and liquidity, any sense of harmony dissipates further, with the US introducing the Volcker Rule and the Dodd-Frank Act, while the UK had its own Independent Commission on Banking. For many, these differing views on structural reform are inevitable, with domestic governments, aware that they and their taxpayers are responsible for their share of any potential loss, putting their own interests first.
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